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Thursday, December 17, 2015

Enjoy Christmas 2015, because if adjudication commences in Ireland, it may be a very different season in 2016!


The Construction Contracts Act 2013 (the 2013 Act) introduces adjudication into Ireland. Put simply, adjudication is a fast track approach to resolving disputes[1] in construction.  Steps towards commencing the 2013 Act have been slow but 2015 has seen some progress.

In May 2015 the Minister for Business and Employment announced the appointment of Dr Nael Bunni as chairperson of the ministerial panel of adjudicators.  In the past month, letters of appointment have issued to successful applicants to the Panel of Adjudicators; once the Minister selects that panel, Section 8 of the act will be fulfilled and there is no reason to delay commencement.


Or is there?

Many would say that the time for adjudication was six or seven years ago[2]; more believe that it is inopportune to introduce the system to deal with payment disputes just as the construction industry is starting to thrive again.

As the panel is selected, 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 2013 Act sets out the timetable which one adheres to in exercising the right to refer a payment dispute to adjudication:

  • 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).
  • 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. Admittedly 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 consent then the timelines become very, very short indeed.

Let’s do the maths: We have: Notice of adjudication + 5 days + 7 days + 28 days = 40 days

Now let’s apply that to the current calendar. If a Notice to Refer is served this Friday (18 December), within five days, the appointed Adjudicator is agreed[3] (23 December) and within 7 days (30 December) the details of the dispute must be delivered. There is then 28 days for the Adjudicator to make a decision. If (as one would expect) the Adjudicator timetables for replies to the claim within that period, one can see how the responding party could be in for a very tense start to the new year!

Surely public holidays don’t count? Unfortunately they do. Section 10 of the 2013 Act states that in relation to the service of notices, when calculating the time periods, if the last of those days is a Saturday, Sunday or public holiday[4], then the next day (which is not a Saturday Sunday or public holiday) shall be taken into account for confirming valid delivery. This is simply an indulgence for the service of notices however. It does not say that these days do not count as the clock ticks down on other time periods. Put simply, the time lines are potentially crippling. In the UK, the legislation does exclude Christmas Day , Good Friday and bank holidays ; not so in the Irish Act.

Admittedly delays may occur (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 etc) but it is important to appreciate how short the 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[5].

Now that the pieces are all falling in place, 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. Let’s enjoy our Christmas holidays, it may be very different in 2016!


[1] Payment disputes pursuant to the Irish Act of 2013; in the UK the scope is wider

[2] This is an update to an update originally produced in June 2015

[3] This is of course the natural point at which the responding party should attempt halt matters and control the timetable by not agreeing within the statutory timeframe, which then forces the matter to the Chair to make an appointment from the Panel, affording the parties extra days in that manner.

[4] As defined by the Organisation of Working Time Act 1997

[5] Carillion Construction Limited v Devonport Royal Dock Yard Limited [2005]


Clare Cashin