As another July passes, the end of the fourth year of adjudication in Ireland also comes to an end (The Construction Contracts Act 2013 came into force for any construction contract entered into after the 25th July 2016, therefore this date is the end of each yearly cycle). As with previous years, the Chair of the Ministers panel of Adjudicators, Dr. Nael G. Bunni, recently issued his yearly report in respect to the activity through the panel in the year to end July. The report outlines some detail in respect to the use of adjudication through the panel but it does not include any information in respect to any adjudications where the Ministers Panel have not been the appointing body. It can therefore only give a snapshot in respect to where adjudication usage actual sits. So what does it tell us...
Use of Adjudication
The latest report, outlines a circa 138% increase year on year in the number of applications. From a low base of 1 application in Year 1, to 11 in Year two, Year three had 39 and now Year 4 has had 54 applications to the panel for appointment of an adjudicator. A similar 144% increase in actual appointments took place year on year from 0 in year 1, to 9 in year 2, to 32 in year 3 and up to 46 in year 4.
The latest report, outlines a circa 138% increase year on year in the number of applications. From a low base of 1 application in Year 1, to 11 in Year two, Year three had 39 and now Year 4 has had 54 applications to the panel for appointment of an adjudicator. A similar 144% increase in actual appointments took place year on year from 0 in year 1, to 9 in year 2, to 32 in year 3 and up to 46 in year 4.
Adjudicators
Quantity Surveyors continue to lead the way as the profession most appointed by the panel with 31% of appointments followed by Fellow’s of the CIArb at 25%, Engineers at 19% and Barristers at 17% (Fellows of CIArb overtaking the other professions to move into 2nd place while Engineers also overtake Barristers in the number of appointments since year 3). Architects are at 6% with solicitors at 3%. The most common rate charged by adjudicators has increased by €50 per hour on average and is now between €250 and €300 (56%) with a charge between €200 and €250 per hour next in 22% of cases. There was also a case recorded with an adjudicator charging over €500 per hour.
Quantity Surveyors continue to lead the way as the profession most appointed by the panel with 31% of appointments followed by Fellow’s of the CIArb at 25%, Engineers at 19% and Barristers at 17% (Fellows of CIArb overtaking the other professions to move into 2nd place while Engineers also overtake Barristers in the number of appointments since year 3). Architects are at 6% with solicitors at 3%. The most common rate charged by adjudicators has increased by €50 per hour on average and is now between €250 and €300 (56%) with a charge between €200 and €250 per hour next in 22% of cases. There was also a case recorded with an adjudicator charging over €500 per hour.
Parties in Dispute
No surprise that Sub contractor's referring against the Main Contractor continues to lead the way in the number of disputes and this relationship was responsible for 72% of the cases on the panel. Main Contractors are also continuing to use the adjudication process as a resolution tool with 14% of cases referred by them against non-Public Body Employers and a further 11% between them and Public Body employers. There is no record of any cases been referred by Main Contractors against Sub contractors through the panel this year. Employers referring against Main Contractors is responsible for a further 3% of cases. There continues to be no reference to a Public Body having used adjudication against a contractor to date. In respect to the outcomes of decisions, the Referring Party were successful on 56% of reported cases with the respondent successful on 24% of cases. 20% of cases had a split decision issued.
No surprise that Sub contractor's referring against the Main Contractor continues to lead the way in the number of disputes and this relationship was responsible for 72% of the cases on the panel. Main Contractors are also continuing to use the adjudication process as a resolution tool with 14% of cases referred by them against non-Public Body Employers and a further 11% between them and Public Body employers. There is no record of any cases been referred by Main Contractors against Sub contractors through the panel this year. Employers referring against Main Contractors is responsible for a further 3% of cases. There continues to be no reference to a Public Body having used adjudication against a contractor to date. In respect to the outcomes of decisions, the Referring Party were successful on 56% of reported cases with the respondent successful on 24% of cases. 20% of cases had a split decision issued.
Location of Dispute
Dublin continues to have the largest amount of disputes with 44% of cases located in the Capital. For the first time since its introduction, there are now recorded cases in Wicklow (11%), Kildare (8%), Wexford (8%) and Laois (6%) in other parts of Leinster. Munster is represented by Cork responsible for 8% of cases and Tipperary with 3%. There were no cases recorded west of the Shannon with Connaught not having any cases included in the report. Ulster makes its first appearance in the report with Monaghan joining the list of counties with 6% of the cases in year 4. Continuing their interesting inclusion on the list is London which is again noted as having cases, with 2 noted as the location of a dispute under the Act.
Dublin continues to have the largest amount of disputes with 44% of cases located in the Capital. For the first time since its introduction, there are now recorded cases in Wicklow (11%), Kildare (8%), Wexford (8%) and Laois (6%) in other parts of Leinster. Munster is represented by Cork responsible for 8% of cases and Tipperary with 3%. There were no cases recorded west of the Shannon with Connaught not having any cases included in the report. Ulster makes its first appearance in the report with Monaghan joining the list of counties with 6% of the cases in year 4. Continuing their interesting inclusion on the list is London which is again noted as having cases, with 2 noted as the location of a dispute under the Act.
Values and Costs
Interestingly, in year 4, two values tied for the most common monetary award. Theses includes the award of nil in 32% of cases and a value between €100-500k which also accounts for 32% of cases through the panel. There highest value recorded is a case where the award was between €500k and €1million.
55% of cases resulted in a total adjudicator cost of less than €10k with a further 25% between €10k and 20k. 20% of cases had a final adjudicator fee of in excess of €20k over the period with the highest reported fee of between €35-40k.
Interestingly, in year 4, two values tied for the most common monetary award. Theses includes the award of nil in 32% of cases and a value between €100-500k which also accounts for 32% of cases through the panel. There highest value recorded is a case where the award was between €500k and €1million.
55% of cases resulted in a total adjudicator cost of less than €10k with a further 25% between €10k and 20k. 20% of cases had a final adjudicator fee of in excess of €20k over the period with the highest reported fee of between €35-40k.
Conclusion
There has been lots of discussion around why Adjudication has been a slow burner in Ireland. In the main it appears that year on year, the use of adjudication is growing although at a far greater rate that had been expected. It is however noted that many in the industry are still completely unaware of the existence of the Act, the payment provisions and adjudication and ongoing publication of the existence of this piece of legislation will be required. It is also to be acknowledged that the existence of the payment provisions and the opportunity to suspend for nonpayment under the ACT will also have assisted the resolution of disputes prior to the need for a step into the adjudication process. As we have now broken through the 50 applications barrier, the hope will be that the number of appointments might continue to grow and breach this figure in year 5.
The Report also includes a note in respect to the existence of a Judicial Review proceedings that have been taken against the Act in a well-publicized dispute. Up to the end of year 4, it appears that the legislation has still not found its way into a court room.
As we approach September 2020, the 5-year term of the Ministers Panel is coming to an end and we anticipate an announcement in respect to the process for the appointment of a new panel.
There has been lots of discussion around why Adjudication has been a slow burner in Ireland. In the main it appears that year on year, the use of adjudication is growing although at a far greater rate that had been expected. It is however noted that many in the industry are still completely unaware of the existence of the Act, the payment provisions and adjudication and ongoing publication of the existence of this piece of legislation will be required. It is also to be acknowledged that the existence of the payment provisions and the opportunity to suspend for nonpayment under the ACT will also have assisted the resolution of disputes prior to the need for a step into the adjudication process. As we have now broken through the 50 applications barrier, the hope will be that the number of appointments might continue to grow and breach this figure in year 5.
The Report also includes a note in respect to the existence of a Judicial Review proceedings that have been taken against the Act in a well-publicized dispute. Up to the end of year 4, it appears that the legislation has still not found its way into a court room.
As we approach September 2020, the 5-year term of the Ministers Panel is coming to an end and we anticipate an announcement in respect to the process for the appointment of a new panel.
For a full copy of the annual report including copies of the previous year’s report please follow the link here to the Construction Contracts Adjudication Services Website.
Keith Kelliher is an Accredited Adjudicator, who has represented Main Contractors and Sub-Contractors in payment disputes for over 20 years in the Irish construction industry. Keith has represented numerous parties in the Adjudication process (both Referring and Responding Parties) to date in Ireland from referral through to a decision. Contact Keith at [email protected] for any assistance with the requirements of the ACT. This article is a commentary piece and does not constitute nor should it be relied upon as legal or professional advice.
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