The introduction of the Construction Contracts Act 2013, which commences for all Construction Contracts entered into after the 25th July 2016, has for the first time, introduced under statute a right to suspend work for non-payment. Section 5 (1) of the Act allows a party to a Construction Contract, to suspend work if they have not received payment in full by the day in which the amount is due.

The interesting inclusion to the section is the words, in full. There is therefore a clear statutory requirement on a party to a Construction Contract to make payment in full as opposed to the current trend to make interim payments on account. This introduces an interesting reality to the manner in which payments in Construction Contracts are to be certified in future.

In order to suspend work, notice must be issued in writing to the other party to the Contract and it must specify the grounds on which it is intended to suspend work. It must be delivered between the day after the day the payment was due and at least 7 days before the suspension is due to begin.

In order to cease a suspension, a party can make payment of the amount due or interestingly the suspension must stop if a decision is made to refer a dispute to Adjudication. In order to protect the contractor seeking payment, a justified suspension cannot be used against the contractor in respect to programme delay and disruption calculations. Contractors must however be careful in respect to suspensions, as an unjustified suspension will not protect a Contractor from claims in respect to loss and expenses as a result of delay to programme.

Contractors must refer to the payment claim date schedule of the contract (or the Schedule to the Act should same apply), in order to confirm the day in which the amount is due.

By way of example if the Schedule to the Act was the basis of payment claim date under the Contract the following would apply.

Project Commencement Date                                                                                                      Day 0
Payment Claim 1 Date                                                                                                                   Day 30             
Latest Date for issuing a Payment Claim Notice (Valuation in old terminology)                 Day 35
Latest Date for issuing a Payment Claim response                                                                  Day 51
Payment Due Date                                                                                                                         Day 60
Earliest Date that works can be suspended (subject to correct notification)                       Day 68
 
Keith Kelliher is an Accredited Adjudicator, who has completed the Diploma in Adjudication in University College Dublin, specifically on the Construction Contracts Act 2013, and has represented Main Contractors and Sub-Contractors in payment disputes for over 15 years in the Irish construction industry. Contact Keith at [email protected] for any assistance with the requirements of the ACT.
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The Construction Contracts Act 2013, will come into force for all Construction Contracts entered into after the 25th July 2016. With its introduction comes a plethora of new terminology for the industry to both understand but now to also religiously stick to. We say goodbye to the term valuation which has been replaced with the term “Payment Claim Notice” and a new term of a “Payment Claim Date” has been introduced. So what do they mean?
 
Payment Claim Date
The payment claim date is the date when a payment claim is required to be made. This date must be agreed at the time of commencement of the contract or at least a mechanism for calculating same otherwise the Schedule of the Construction Contracts Act will apply. When it comes to subcontracts the Schedule applies in all instances unless the terms agreed are more favourable to the subcontractor.
The schedule states that the payment claim date is 30 days after the commencement date in the contract and every 30 days thereafter up to the date of substantial completion and then 30 days after the date of final completion. Why is this date important? Well in accordance with section 4 of the Act, in order to receive the protection (based on the current untested wording of the ACT) of the ACT, a contractor has 5 days from the Payment Claim Date with which to issue a Payment Claim Notice. The schedule to the Act also states that no payment due under a Construction Contract can be made later than 30 days from the Payment Claim Date. It will therefore be, for contractors and subcontractors to regimentally submit their payment claims within a tight period of time into the future as opposed to the generally loose and haphazard methods that valuations are currently submitted, whilst also providing a tighter window for the receiving party to the Contract to deal with and certify the payment.   
 
Payment Claim Notice
The introduction of a Payment Claim Notice in the Act must be seen as an apparent attempt to formalise and standardise a payment request process in the Irish Construction industry. For those currently working in the area of payment certification, the attempt to standardise the information that must be submitted will generally be welcomed. A Payment Claim Notice is a notice which specifies:

• The amount claimed (even if zero)
• The Period covered by the claim
• The stage of work or activity to which the payment claim relates
• The subject matter of the payment claim
• The basis of the calculation of the amount claimed

A Payment Claim Notice must receive a response from the receiving party within 21 days of the Payment Claim Date which in practical terms can mean a period of 16 days to actually deal with the claim, due to the fact that the issuing contractor can wait a period of no later than 5 days after the Payment Claim Date to actually submit the claim.
Time will tell how the industry reacts to the new requirements and obligations.
 
Keith Kelliher is an Accredited Adjudicator, who has completed the diploma in Adjudication in University College Dublin, specifically on the Construction Contracts Act 2013, and has represented Main Contractors and Sub-Contractors in payment disputes for over 15 years in the Irish construction industry. Contact Keith at [email protected] for any assistance with the requirements of the ACT.

Minister Nash Signs Order Implementing the Construction Contracts Act, 201313th April 2016
The Minister for Business and Employment, Ged Nash, has today signed the 'Construction Contracts Act 2013 (Appointed Day) Order 2016' which will give legal effect to the provisions of the Construction Contracts Act, 2013.
The Order states that the '25th July, 2016 is appointed pursuant to section 12(2) of the Construction Contracts Act 2013 (No. 34 of 2013) and that Act shall apply in relation to construction contracts entered into after that date.'
Minister Nash said: “This is a significant day in the calendar of events leading to the implementation of this important legislation and I am very pleased to be in a position to make this Order. It will transform the landscape in which the construction sector operates in Ireland.”
The Minister added: “The changes to the way applicable construction contracts will now be drawn up will guarantee payment to sub-contractors at regular intervals during the life of a contract, and in addition, the legislation provides for a statutory adjudication service which entitles parties involved in a payment dispute to seek to resolve the matter through adjudication. This will take place in a short time period – the Act envisages 28 days.”
It is intended that the Code of Practice relating to the conduct of adjudications will be published in coming weeks.
ENDS
For more information contact Press Office 01 631 2200 or [email protected]
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