Adjudication Article Series: Where Are We Now – How Far Might We Go?

This summer was the third anniversary of the new statutory right to refer "payment disputes" to adjudication in Ireland. Pursuant to the Construction Contracts Act 2013, adjudication aims to provide a speedy and cost effective solution to construction payment disputes with a view to keeping cash flows healthy and projects completing on time.

The Construction Contracts Act 2013 provides for the establishment of a panel of adjudicators and, last week, the Chairperson of the Ministerial Panel of Adjudicators, Dr Nael Bunni, published his third annual report. The Chairman's reports provide a very helpful insight for the sector. It is clear, for example, that there is an upward trend each year in the number of applications for appointment of an adjudicator, with the past year seeing a nearly three-fold increase on the previous year. As the experience of adjudication in Ireland grows it's a good time to consider what we've learned, and we intend to look at the Irish experience so far later in this series of articles. However, to kick off, we begin by looking at questions of scope, starting with a review of the right to adjudicate and the meaning of "construction contracts". Over the course of the full six part series we'll visit the following topics:

the right to adjudicate and the meaning of "construction contracts"; when a dispute is - or is not - a dispute; the impact of the Constitution and adjudication on procedure in Ireland; how the Construction Contracts Act 2013 impacts contracts; adjudication - the Irish experience so far; and adjudication - a comparative perspective. How far does the right to adjudicate go under the Construction Contracts Act 2013?

The Construction Contracts Act 2013 entitles parties to construction contracts to avail of adjudication, a fast and cost-effective way to deal with "disputes relating to payment". This article looks at the question of whether some of the side agreements commonly seen in construction deals are "construction contracts" for the purposes of this Act.

Whether an agreement comes within the definition of "construction contracts" as defined by the Construction Contracts Act 2013 (the "Act") can affect whether the parties to the contract have a right to resolve payment disputes though adjudication. Examples of "construction contracts" are typically, say, a design & build or traditional contract between an employer and contractor, consultant appointments, and any sub-contracts. This makes sense if you consider that a main aim of the Act was to improve cash flows and payment dispute resolution in the construction sector. However there are a range of other agreements in construction deals and the question may arise as to whether these too are "construction contracts". The answer can have a significant impact on parties' rights and obligations. If there is ambiguity over whether a dispute arises from a "construction contract", a party unwilling to agree payment could argue that there is...