Click for copies of the Judgements in all the cases that mention the Construction Contracts Act 2013

On the 15th January 2016, confirmation was published[1] by the Minister of State for Business and Employment of the first Adjudicators Panel formed under Section 8 of the Construction Contracts Act. The notice noted an appointment period for the 30 strong panel of Adjudicators from the 8th December 2015 to the 7th December 2020.

Jump on 5 years and with no move made by the department to have a new panel formed the  Tánaiste and Minister for Enterprise, Trade and Employment  confirmed, the second Adjudication Panel[2] under Section 8 of the Construction Contracts Act. The second panel was formed by reappointing the first panel until the 7th March 2021 in order to allow the department the opportunity to run an appointment process for a new panel. The department commenced this process on 9th December with publication of expressions of interest to be submitted no later than the 11th December 2020. This process will continue in the early part of 2021 with appointments clearly envisaged in advance of the 7th March 2021 when the current panel appointments cease.

So what if anything have we learned from the initial panel period?
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In September 2020, under a freedom of information request I wrote to the Department of Trade, Enterprise and Employment, to seek information in respect to the number of appointments by the panel in the period and the number of appointees that arose from those appointments. I also requested details in respect to the number of appointments each member of the panel received in the period. I was very surprised by the response. Bizarrely for a publicly appointment panel that was formed through statute the department reverted to state:

"I am sorry to inform you that we cannot locate the records and that I must therefore refuse your request"

The response went on further to state:

"Section 15(1)(a) of the ct states that an FOI request may be refused if:

'the record concerned does not exist or cannot be found after all reasonable steps to ascertain its whereabouts have been taken.'

'all reasonable steps to ascertain its whereabouts have been taken'"

So the department in which the adjudicator appointment service is operated out of, the department to which applications for appointments of adjudicators under the Act are made to and from which the appointments by the Chair of the panel are confirmed, does not have the records of who they have made appointments to……

Unperturbed by the initial setback (a setback I had never envisaged) and eager to understand the reason for such a position, I contacted a public representative for assistance. On the 13th January 2021, in response to a written freedom of information request by Mr Ged Nash TD, the Department provided the majority of the details that had been refused under my initial request. The response received provided some interesting and concerning details.

 

• In total from the commencement of the Act to the 30th November 2020, a total of 96 appointments were made by the Panel.

 

• In the 5 year period of appointment’s only 18 of the 30 members of the panel received an appointment. 12 members of the panel received no appointment (40% of the panel members).

 

• 3 members of the panel have received 10 or more appointments each and the three members of the panel account for 38% of all appointments from the panel.

 

• The highest number of appointments made to a single member over the period is 14 number cases.

 

• Only 1/3 of the panel (10 members) have received 5 or more cases over the period.

 
The response did not give the names of the members appointed as it was stated that as the payment disputes “are private law contractual disputes, it would not be appropriate to disclose the names of the members of the Panel to whom disputes have been assigned”. Given no information was requested in respect to any disputes it is unclear as to how the identification of who received appointments from the panel in any way conflicts with the private law contractual disputes of parties.

As we seek to build momentum around Adjudication in Ireland it is very disappointing to note that 40% of the Ministers panel of Adjudicators have never even received an appointment in the 5 year period. The very basis for having a single managed panel of Adjudicators in the legislation was to ensure that experience could be gained by the adjudicators to assist in ensuring the development of excellence and expertise in the area. It would appear that for some reason this has not happened in the first cycle of our panel. It is further disappointing to see a large number of appointment’s centered on a very small circle of adjudicators, an issue that clearly must be addressed by any new panel.

Those who operate in the area will agree that Adjudication provides a real and effective option for parties in respect to the resolution of payment disputes. In order to be effective the need for an experienced pool of Adjudicators is a vital component. Diversity, Equality and Transparency are all buzz words that we regularly hear in business and politics but never more so than in the formation and operation of the new panel of Adjudicators do we clearly need these buzz words to find their way into practice……..

I would again like to thank Mr Ged Nash TD for his assistance in attaining the statistics from the Department as outlined in this piece. 

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 22 years in the Irish construction industry. Contact Keith at kkelliher@adjudicator.ie for any assistance with any form of construction contract or payment issue. This article is a commentary piece and does not constitute nor should it be relied upon as legal or professional advice.

[1] http://www.irisoifigiuil.ie/currentissues/IR150116-2.pdf

[2] http://www.irisoifigiuil.ie/archive/2020/december/Ir081220_NEW.pdf

​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.​

​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.

​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. 

​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. 

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.

​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.

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.

a podcast Keith did with Ciaran Brennan of livecosts.com on the Construction Contracts Act 2013

A Podcast Keith did with Ciaran Brennan of Livecosts.com in respect to the impact of the COVID-19 Virus on the industry

As another July passess, the end of the third 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...

Adjudicators
Quantity Surveyors continue to lead the way as the profession most appointed by the panel with 38% of appointments followed closely by Barristers at 21% and Engineers at 18%. Architects, marking the year in which they received their first appointment from the panel are at 15% with solicitors at 6% and a Fellow of the CIArb at 3%. The most common rate charged by adjudicators was between €200 and €250 (46%) with a charge between €300 and €350 per hour next in 35% of cases. 

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 is now responsible for 66% of the cases on the panel. Main Contractor's are also using the adjudication process as a resolution tool with 19% of cases referred by them against non Public Body Employers, a further 6% between them and Public Body employers and 3% between them and Sub Contractors. Employers referring against Main Contractors is responsible for a further 6% of cases. There is 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 58% of reported cases with the respondent successful on 27% of cases. 15% of cases had a split decision issued. 

Location of Dispute
Dublin continues to have the largest amount of disputes with 62% of cases located in the Capital. Interestingly no other county in Leinster has ever registered a dispute to the Adjudication service. Munster is well represented however with Cork responsible for 9% of cases, Tipperary 6% and Kerry and Waterford with 3% each. May and Galway represent 6% and 3% respectively with 3% of cases noted without a location. Most interesting from the list is the fact that London is noted as the location of a dispute under the Act. 

Values and Costs
Disputes for values between €100-500k account for over 40% of cases through the panel followed closely by disputes below €100k at 31%. 47% of cases resulted in a total adjudicator cost of less than €10k with a further 22% between €10k and 20k. 25% of cases had a final adjudicator fee of in excess of €20k over the period with the highest reported fee of between €40-45k.

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 non payment under the ACT will also have assisted the resolution of disputes prior to the need for a step into the adjudication process. It will be interesting to see what changes another year might bring in respect to adjudication.

For a full copy of the annual report including copies of the previous years report please follow the link here to the Construction Contracts Adjudication Services Website.

Very much enjoyed my interview today on the topic of Mediation with Gerry Kelly on LMFM radio alongside my colleague Bill Holohan. Many thanks to Gerry for directing us through a great overview of the process.

Shortly after the official start of the collapse of Carillion Plc on 15th January 2018, when the main company and five group companies were placed into liquidation by the company directors, the phone started ringing and questions were being asked by concerned subcontractors about the impact of this move on projects in Ireland. A review of one subcontractors file and the usual gaps that exist have raised some interesting questions about the impact of the now enacted and commenced Construction Contracts Act on any outstanding payments to subcontractors in this type of scenario.

Background 

On the 22nd July 2016, the InspiredSpaces Consortium was awarded a Contract by the National Development Finance Agency for the construction of a 5 school PPP bundle. InspiredSpaces is a joint venture (50/50) between Carillion and an investment company called Dutch Infrastructure Fund. InspiredSpaces was originally set up in 2004, as a Carillion joint venture consortium vehicle to carry out collaboration projects across a number of industry sectors. InspiredSpaces is described on its website as a Carillion company but is itself a limited company registered in England and Wales.
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Sammon Contracting Limited, a Kildare based contractor, were subsequently appointed by the consortium to facilitate the construction of the schools bundle. What is not clear yet forms an important aspect of consideration from the Acts perspective, is the contractual relationship between InspiredSpaces and Sammon Contracting and if there is any intermediary between the two entities. It has been noted in one article available online that Carillion Construction Limited were contracted by the InspiredSpaces consortium with Sammon Contracting subcontracting from Carillion Construction Limited. This relationship quandary in itself would appear to have an important and interesting ramification under the Construction Contracts Act particularly when it comes to any paid when paid provisions.
    
Paid When Paid

I have previously written about the ineffective nature of paid when paid clauses in Irish construction contracts arising out of a provision in the Construction Contracts Act under Section 3(5). There are however some exclusions as outlined under Section 3(6). Were a party to a construction contract relies upon the payment of another party who is not a party to the contract and that party has a receiver appointed then the contracting party are entitled to rely upon a paid when paid clause down the supply chain. There is one main requirement in that the reliance upon a paid when paid clause in itself requires that there is a paid when paid clause in the contract between the parties in the first instance. To use the present scenario as an example, for Sammon Contracting to rely upon a paid when paid clause with their subcontractors, InspiredSpaces or Carillion Construction Limited would have to have a receiver appointed and Sammon Contracting would need to have a paid when paid provision within their subcontracts with their subcontractors.

Where further questions arise is in respect to the current legal standing of InspiredSpaces and Carillion Construction Limited. Carillion Construction Limited are listed as one of the, now sixteen, Carillion group companies that were placed into compulsory liquidation with a further company currently placed in voluntary liquidation. In respect to this company, the reliance upon a paid with paid clause in any subcontract would therefore appear to have a basis for effect. InspiredSpaces however is not a company listed as having had a receiver appointed and therefore any paid when paid clause would still appear to be ineffective under the Construction Contracts Act.

Given the origins of the Construction Contracts Act in Ireland, the Carillion collapse has provided the Irish Construction industry with a first real glimpse into the available options and protections that are offered and available under the Act in its truest sense. It has clearly highlighted the necessity and importance for all contractors to have knowledge and sight of those involved in the full contractual chain both above and below their heads as it goes to the heart of their risk and ability to recoup through the payment and adjudication provisions of the Construction Contracts Act.            
 
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 19 years in the Irish construction industry. Contact Keith at kkelliher@adjudicator.ie 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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