The Department of Jobs, Enterprise and Innovation have on the 5th July 2016, issued the final version of the Code of conduct for Adjudications in Ireland under the Construction Contracts Act 2013.

The final published version of the Code of Practice does in its content include a number of new additions from previous drafts. In respect to the notice of Intention to refer, the code now places a direct requirement on the party that they must attach a copy of a written construct contract should same exit. The inclusion of the “must” in the requirement would imply non-compliance and therefore a defunct Notice should this not be complied with.

The new code also includes a new section (6) which is aimed at outlining the responsibilities of the prospective Adjudicator to the parties to a payment dispute.  In particular there is the inclusion of the requirement under section 6(ii), that an Adjudicator should only accept an appointment if they believe they are competent to determine the issues in dispute. Does this add a new dimension to the question over the definition of competency of say an Architect taking on a payment dispute centred around measurement or a Surveyor taking on a dispute centred on quality?

The code has for the first time includes, under section 8, a note in respect to the possibility of inclusion within the construction contract of a named person to perform the role of Adjudicator should the need arise under the Contract. This addition would appear to go towards assisting the parties in the maintaining control and agreement over the appointment of their own Adjudicator within the five day window allowed by the Act. The code also allows under section 9 and 10, for a further breakdown in a process of agreement of the Adjudicator within the five day window.

In addition to the general control of the Adjudication process, the code has also included under section 12, and further at section 42, that an Adjudicator, no matter how appointed, must notify the Construction Contracts Adjudication Service and supply them with some information both at the outset of appointment and on completion for the purpose of compiling statistical information relating to the Act.

The revised code has, correctly, under section 24, extended the list of information that should be provided under cover of the Notice of Referral from the previous draft. The need to include the contentions on which the Referring Party intends to rely upon will be a necessary addition in order to allow for a fair and reasonable response from the Responding party on the issues raised.

The full version of the published Code of Practice for Adjudications in Ireland is available on the Departments website here. https://www.djei.ie/en/Publications/Code-of-Practice-on-the-Conduct-of-Adjudications.html

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 kkelliher@adjudicator.ie for any assistance with the requirements of the ACT.
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​The Code of Practice on the Conduct of Adjudications has been published in accordance with section 9 of the Construction Contracts Act, 2013 by the Minister of State for Employment and Small Business, Mr Pat Breen TD.The Code of Practice is binding on all adjudicators operating under the Act regardless of whether the Adjudicator is appointed to a payment dispute under section 6(3) or 6(4) of the Act.
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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, removed the ability for a party to a Construction Contract, to make a payment conditional on the making of a payment by a third party.

Section 3 (5) of the Act, has been introduced to remove this element from Construction Contracts.

Long the bane of sub-contractors, the pay when paid clause of many current Contracts, has effectively resulted in sub-contractors acting as part financiers of projects long after their works are completed. Coupled with the inability of parties to contract out of the provisions of the Construction Contracts Act, under section 2(5), these charges will mark a significant shift in the movement of cash-flow in Construction Projects.

The Act, under section 4 (3) also for the first time places a requirement on the paying party, who disagrees with an amount claimed in a payment claim notice, to provide a response not later than 21 days after the payment claim date specifying, the amount they propose to pay, the reason for the difference and the method of calculation of their proposed value. This differs greatly from the current Contract provisions where, like the RIAI articles of agreement 2012 edition, under section 35, an explanation for any difference must be requested. In addition the inclusion of clause 4 (3b), means that even where an agreement has not been reached in respect to the difference between the parties, the amount that the paying party has agreed to in their payment response, must be paid by the payment due date. This again goes to the heart of the purpose of the Construction Contracts Act, which was to facilitate the positive flow of cash in a project.

Section 4(4) of the Act, is an attempt to formalise the issue of contra charges, which are regularly a form of contention in the current final account process. This section allows for the paying party to formally identify contra charges for breach of contractual or other obligations within a contract and to make adjustment for same from a payment claim notice. They place a requirement on the paying party to detail the contra charge in terms of when and how the claim arose, the particulars of the loss, damage or claim and the apportionment of any claim. The wording of the Act, has however, not placed an obligation on the timing of the contra charge adjustment, and it is therefore likely, and unfortunate, that the issue of contra charges arriving late in the final account process is still very much alive.

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 kkelliher@adjudicator.ie for any assistance with the requirements of the ACT.
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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 kkelliher@adjudicator.ie 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 kkelliher@adjudicator.ie 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 press.office@djei.ie
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