Update for the Quantity Surveyor
Last week in Part 1 of this article, we summarised the mandatory payment provisions set out in the Construction Contracts Act 2013, which will be enforceable from 25th July of this year. In this article we set out the main points covered in the other two aspects of this legislation i.e. the right to cease work for non-payment and the mechanisms for statutory adjudication where a dispute arises.
Entitlement to stop work for non-payment
There is now a solid legal basis for contractors in construction to cease working on a job where payments agreed have not been met. There is a requirement however that written notice has to be delivered to the main contractor or employer at least seven days before work is stopped and this notice must outline why work is to cease. Should a cessation proceed, the Act stipulates that payment terms in line with the original construction programme will apply i.e. if the cessation is justified the sub-contractor will not be penalised by the impact of the suspension. Once payments due are made, work must resume.
Statutory adjudication for payment disputes
A useful and significant part of this legislation is a new adjudication procedure open to those working under the terms of a construction contract. There is now a legal entitlement and framework to refer payment disputes to adjudication and this opportunity has not been available to businesses in the past. It is intended to offer a quick and low cost way to arbitrate and settle disputes and any decisions handed down in the process are legally binding unless subsequently appealed and over-turned. The adjudicator has considerable powers and can make binding decisions on whether or not payment is owed. Assuming we take the same approach in the legal system as the UK, then its highly likely that if the decision is challenged, the Irish courts will follow the approach taken in the UK and the decision will be upheld. The system should prove efficient as once a dispute is referred, the adjudicator has a maximum of 28 days to make a decision. There is an opportunity to extend this by another two weeks, if both parties or the referrer alone agree. At present disputes can take up to 3 years to resolve through the courts therefore this is a significant change in practice for the industry which should benefit from the faster turnaround times.
In relation to the exact provisions for adjudication, at present the Code of Practice has not yet been published however it is expected that this will be issued within a few weeks.
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