22 September 2016
The Construction Contracts Act 2013 (CCA 2013) dubbed “Pay Now, Argue Later” legislation covers most building contracts, sub-contracts and also the fee agreements that architects, engineers, surveyors and Certifiers sign with their clients if they are above €10,000 (incl. VAT)- see earlier post Alert | Construction Contracts Act. This recent binding legislation changes payment arrangement, how disputes are resolved and it primarily ensures parties to a construction contract are paid promptly. There are some exclusions.
The Construction Bar warn that timescales carry a risk of ‘rough justice”: “Construction Bar Association of Ireland » Adjudication“.
The following article appeared in the Engineer’s Journal on 20th September 2016 regarding CCA 2013 and how it relates to construction sector payments and disputes; full article below (link here):
“Construction Contracts Act, 2013 – what does it mean for the construction sector?
20 September 2016
Loughlin Quinn outlines the changes that apply to certain construction contracts entered into after 25 July 2016 and the introduction of the new statutory adjudication provision under the Construction Contracts Act, 2013
July 2016 witnessed the long-awaited Construction Contracts Act finally coming into effect. Former Senator Feargal Quinn was the visionary behind this legislation, which was introduced in the Seanad in 2010 and supported by successive governments since.
Minister of State for Employment and Small Business, Pat Breen TD, published a revised Code of Practice Governing the Conduct of Adjudications on 25 July. The publication of the Code of Practice was the last remaining function to be completed prior to the commencement of the legislation.
The construction industry is a vital part of our economy and after a number of difficult years, the sector is again seeing expansion. It is timely, therefore, for this important legislation to come into effect now; legislation that provides certainty in respect of payment between parties to applicable contracts and a statutory entitlement to adjudication as a remedy in payment disputes, previously the domain of arbitration and litigation only.
The purpose of the Act is to regulate payments, particularly the timing of payments, in respect of construction contracts covered by the legislation. The Act does not apply to all construction contracts. For example, it excludes contracts of a value of not more than €10,000 as it excludes too contracts which relates only to a dwelling of not greater than 200 square metres, where a party to that contract occupies or intends to occupy the dwelling as his/her residence.
Certain other types of contracts are excluded from the scope of the legislation and the exclusions illustrate a pragmatic and flexible approach adopted during the passage of the legislation through the Oireachtas.
Contracts and payment details
Construction contracts covered by the Act must provide for the amount of each interim and final payment or an adequate mechanism for determining those amounts; the payment claim date for each amount due or an adequate mechanism for determining it; and the period between the payment claim date and the date on which the amount is due. [BRegs Blog note: Consultants need to include this in their fee arrangements from July 2016]
A primary aim of the legislation is to provide statutory payment protections for subcontractors. Therefore, a subcontract must at least provide the following payment claim dates in accordance with the Schedule to the Act: 30 days after the commencement date of the construction contract; every 30 days up to the date of substantial completion; and 30 days after the date of final completion. [BRegs Blog note: Engineers, Architects, Surveyors, Certifiers and other consultants arranging their own Design Team fee payments need to include for this because ‘pay when paid’ clauses are no longer legal].
The date on which payment is due in relation to an amount claimed under a subcontract may not be later than 30 days after the payment claim date.
For the first time, a party to a construction contract will have the right to refer a payment dispute for adjudication. The parties may jointly agree to appoint an adjudicator of their own choice.
However, if the parties cannot agree as to whom to appoint, an application may be made to the Chairperson of the Construction Contracts Adjudication Panel, Dr Nael Bunni to appoint an adjudicator to the dispute from the Ministerial appointed Panel of Adjudicators. [BRegs Blog note: The list of Adjudicators is here http://www.adjudicationpanel.ie/adjudication-in-ireland.php ]
An adjudicator is required to reach a decision within 28 days of the day the dispute is referred to him/her. This period may be extended to 42 days with the consent of the party referring the dispute to the adjudicator or such longer period as is agreed by all of the parties to the dispute.
The decision of an adjudicator is binding on the parties unless they reach a final settlement of their dispute or a different decision is reached in the event that the payment dispute is referred to arbitration or if proceedings are initiated in a court in relation to the adjudicator’s decision.
Code of practice governing adjudications
The Code of Practice Governing the Conduct of Adjudications is binding on all adjudicators operating under the Act and is the product of a collaborative effort by the many stakeholder organisations most affected by the Act, working with the Construction Contracts Adjudication Service.
Information on the full provisions of the Construction Contracts Act, 2013 together with the Code of Practice Governing the Conduct of Adjudications is available on the website of the Department of Jobs, Enterprise and Innovation at www.djei.ie.
BRegs Blog Note: The Construction Industry Federation have posted a useful 10 point guide: CONSTRUCTION CONTRACTS ACT – TOP 10 WHAT YOU NEED TO KNOW.
Related Posts (courtesy of Engineers Journal):