MARTIN WALDRON BL FCIArb MSCSI MRICS Accredited Adjudicator

MARTIN WALDRON BL FCIArb MSCSI MRICS Accredited Adjudicator & Mediator Law Library | The Four Courts| Dublin 7 +353(1)8177865| +353(86)2395167 | www. waldron. ie|martin@waldron. ie THE CONSTRUCTION CONTRACTS ACT 2013 Introduction to Adjudication By Martin Waldron BL Anthony Hussey FCIArb MSCSI MRICS Solicitor Chartered Arbitrator Accredited Adjudicator & Mediator SCSI Seminar on Construction Contracts Act June 17 th 2016

INTRODUCTION Construction Contracts Act 2013 - Milestones ◆ Bill tabled: 12 th May 2010 ◆ Act passed and commenced: 29 th July 2013 ◆ Chairman of panel of adjudicators announced: 12 th May 2015 ◆ Panel of adjudicators formed: 15 th January 2016 ◆ Ministerial order signed: 13 th April 2016 ◆ Code of practice: TBC ◆ Effective date: 25 th July 2016

INTRODUCTION Topics • The dispute resolution provisions, incl. applicability • What adjudication is and what it is not • The timescales involved • The effect of the Act on existing contractual provisions

THE APPLICATION OF THE DISPUTE PROVISIONS THE APPLICATION OF THE ACT Disputes relating to payment – Section 6(1) A party to a construction contract has the right to refer for adjudication in accordance with this section any dispute relating to payment arising under the construction contract (in this Act referred to as a “payment dispute”)

THE APPLICATION OF THE DISPUTE PROVISIONS THE APPLICATION OF THE ACT Disputes relating to payment – Section 6(1) Any dispute Relating to payment Arising under

THE APPLICATION OF THE DISPUTE PROVISIONS THE APPLICATION OF THE ACT Disputes relating to payment – Section 6(1) Any dispute one, some, or several, as specified, no matter how much or many, what kind or quality, etc Relating to payment Arising under

THE APPLICATION OF THE DISPUTE PROVISIONS THE APPLICATION OF THE ACT Disputes relating to payment – Section 6(1) Any dispute one, some, or several, as specified, no matter how much or many, what kind or quality, etc Relating to payment to establish association (between two or more things) or (of something) to have relation or reference (to something else) Arising under

THE APPLICATION OF THE DISPUTE PROVISIONS THE APPLICATION OF THE ACT Disputes relating to payment – Section 6(1) Any dispute one, some, or several, as specified, no matter how much or many, what kind or quality, etc Relating to payment to establish association (between two or more things) or (of something) to have relation or reference (to something else) Arising under Same as “in connection with”, ”in relation to”, “out of”: Fiona Trust & Holding Corporation v Privalev & Ors [2007]

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 – notice of adjudication 6. —(2) The party may exercise the right by serving on the other person who is party to the construction contract at any time notice of intention to refer the payment dispute for adjudication.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - appointment 6. —(3) The parties may, within 5 days beginning with the day on which notice under subsection (2) is served, agree to appoint an adjudicator of their own choice or from the panel appointed by the Minister under section 8.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - appointment 6. —(4) Failing agreement between the parties under subsection (3), the adjudicator shall be appointed by the chair of the panel selected by the Minister under section 8.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - referral 6. — (5) The party by whom the notice under subsection (2) was served: (a) shall refer the payment dispute to the adjudicator within 7 days beginning with the day on which the appointment is made, and (b) shall at the same time provide a copy of the referral and all accompanying documents to the person who is party to the construction contract.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - decision 6. —(6) The adjudicator shall reach a decision within 28 days beginning with the day on which the referral is made or such longer period as is agreed by the parties after the payment dispute has been referred. (7) The adjudicator may extend the period of 28 days by up to 14 days, with the consent of the party by whom the payment dispute was referred.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - decision 6. —(10) The decision of the adjudicator shall be binding until the payment dispute is finally settled by the parties or a different decision is reached on the reference of the payment dispute to arbitration or in proceedings initiated in a court in relation to the adjudicator’s decision.

THE DISPUTE PROVISIONS Right to refer payment disputes to adjudication – Section 6 - enforcement 6. —(11) The decision of the adjudicator, if binding, shall be enforceable either by action or, by leave of the High Court, in the same manner as a judgment or order of that Court with the same effect and, where leave is given, judgment may be entered in the terms of the decision.

THE DISPUTE PROVISIONS - SUSPENSION DISPUTE PROVISIONS – SUSPENSION Adjudicator’s Decision – Section 7 - right to suspend (1) Where any amount due pursuant to the decision of the adjudicator is not paid in full before the end of the period of 7 days beginning with that on which the decision is made, the executing party may suspend work under the construction contract by giving notice in writing under subsection (2).

THE DISPUTE PROVISIONS - SUSPENSION DISPUTE PROVISIONS – SUSPENSION Adjudicator’s Decision – Section 7 - loss of right to suspend (3)(b) after the decision of the adjudicator is referred to arbitration or proceedings are otherwise initiated in relation to the decision.

THE DISPUTE PROVISIONS OPERATIVE DATE The Crossover Period Section 12(2) This Act applies in relation to construction contracts entered into after such day as the Minister may by order appoint.

THE DISPUTE PROVISIONS (IN BRIEF) THE ACT PROVISIONS IN BRIEF Disputes Section 6 of the Act introduces adjudication as an unavoidable, but optional, means of resolving disputes relating to payment in a very short timeframe. Resulting in a binding decision. Suspension for failure to comply with an adjudicator’s decision Section 7 of the Act provides for a right to suspend works for failure to comply with an adjudicator’s decision.

ADJUDICATION Adjudication Cameron Ltd. v. John Mowlem (1990) 53 BLR 24 (E&W): “Adjudication is not arbitration, it is ephemeral and subordinate, the decision being subject to review in arbitration (or litigation). ” However, it is binding pending any further proceedings (Section 6(10))

ADJUDICATION Adjudication It is often referred to as rough justice: why? Because of time limitations. To be completed within 28 days; or 42 days by agreement with the referring party; or by longer period if extended by the agreement of the parties. Tight timeframe = lack of full procedures and safegaurds by necessity Tight timeframe = difficulty in developing detailed arguments

ADJUDICATION Adjudication – cont’d Rough justice: Bouygues (UK) Ltd v Dahl- Jensen (UK) Ltd [2000] EWCA 507: “Mr Gard chose to approach the calculation of the sums due under the contract, he was wrong to make an actual award requiring payment under that contract without taking account of the fact that the 5% of the contract sum that represented the retention monies was not yet due for payment. The award, therefore, was wrong: but is that a ground on which its enforcement can be resisted? ”

ADJUDICATION Adjudication – cont’d Rough justice: The Court went on to find: “He answered the right question. But, as is accepted by both parties, he answered that question in the wrong way. That being so, notwithstanding that he appears to have made an error that is manifest on the face of his calculations, it is accepted that, subject to the limitation to which I have already referred, his determination is binding upon the parties. ”

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Example timetable Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties • Reply to referral 8 d • Response to reply 4 d • Adjudicator issues and observations 3 d • Replies 2 d • Any other submissions… • Preparation for hearing and/or site visit 2 d • Hearing and/or site visit 1 d • Consideration and writing of written reasoned award 8 d

DISPUTES – TIMELINE DISPUTE TIMELINE Notice to refer At ANY TIME Fail to agree an adjudicator, apply to Chairman (presumed + see Code) No defined limitation Chairman appoints an adjudicator Within 7 days but no sooner than 5 days after notice to refer 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties Agree an adjudicator Within 5 days 2 days for adjudicator to accept Issue referral Within 7 days Cc respondent Issue decision Within 28 days of referral Or 42 days with referring parties agreement Or as agreed between both parties

EXISTING CONTRACTUAL DISPUTE PROVISIONS EXISTING CONTRACTUAL PROVISIONS The Current Regime Present dispute resolution provisions in certain contracts RIAI – conciliation/arbitration PWC – without prejudice discussions / dispute management / conciliation / arbitration Bespoke Contracts – anything up to mediation/conciliation/arbitration with the possibilty of joinder of low level disputes to high level disputes. These sorts of provisions will no longer be effective to prevent payment in the currency of a contract where adjudication will now be an entitlement of the parties.

EXISTING CONTRACTUAL DISPUTE PROVISIONS EXISTING CONTRACTUAL PROVISIONS The new (old) PWC Provisions Without prejudice discussion ↓ Dispute management procedure ↓ Conciliation ↓ Arbitration

EXISTING CONTRACTUAL DISPUTE PROVISIONS EXISTING CONTRACTUAL PROVISIONS Revise contracts Or NOT Leave out - purely statutory, amenable to judicial review. Include - simpler and supports the aims of the Act. Payment provisions - little argument in favour of leaving out.

SUMMARY DISPUTES – SUMMARY What do Quantity Surveyors need to be alert to? 1. The new dispute resolution regime generally and in particular the short timeframes involved in preparing and responding to claims. 2. The nature of adjudication so as to advise clients. 3. The risk of a suspension of the works if a client fails to honour an adjudication award. 4. The advantages and disadvantages of amending contracts or not. 5. The effect of this on their own terms of engagement disputes clauses. 6. The rendering of existing extended dispute resolution provisions as ineffective.

MARTIN WALDRON BL FCIArb MSCSI MRICS Accredited Adjudicator & Mediator Law Library | The Four Courts| Dublin 7 +353(1)8177865| +353(86)2395167 | www. waldron. ie|martin@waldron. ie Martin Waldron BL FCIArb MSCSI MRICS Accredited Adjudicator & Mediator