Construction / Infrastructure Update September 2021

• Published date: 28 September 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Matheson
• Author: Ms Rhona Henry, Kimberley Masuda and Nicola Dunleavy

Introduction

In this edition, we outline the key drivers impacting the contraction of the professional indemnity insurance market in Ireland over the last few years. We also take a closer look at recent adjudication cases focussed on the right to counterclaim and the binding nature of an adjudicator's decision. Finally, we explore the function of The Office of the Planning Regulator (the "OPR") and its work so far.

Professional Indemnity Insurance: the drivers behind contraction of the market

The professional indemnity insurance market in Ireland has considerably contracted over the last few years. Now more than ever, the construction world is feeling the effects of this and made worse by the burden facing the sector due to the COVID-19 pandemic. The difficulty in obtaining or renewing professional indemnity insurance is an uphill struggle faced not only by employers and parties with design responsibility, but also third party project stakeholders such as funders and landlords.

The drivers behind the contraction of this particular insurance market include:

Key takeaway: Employers, contractors and designers now need to carry out a full audit of the contractual commitments provided by them (eg, professional indemnity insurance obligations and indemnity provisions) (particularly those with any design responsibility). We frequently hear from designers / contractors that they are now facing difficulties in securing renewal of their policies originally underwritten on an "each and every claim" basis. Cover underwritten "on an aggregate basis" being offered instead has led to parties no longer being able to comply with their contractual obligations. Employers, contractors and designers need to assess where insurance gaps now exist and work through possible alternatives in each case.

Adjudication and the High Court: the right to counterclaim and the binding nature of an adjudicator's decision

Following on from the Gravity Construction Limited v Total Highway Maintenance Limited¹ case, the High Court has again confirmed the enforceability of an adjudicator's decision in the recent case Principal Construction Limited v Beneavin Contractors Limited. ² In this latest case, Principal Construction Limited (PCL) brought an action to enforce an adjudicator's decision relating to the value of variations that PCL had carried out under its contract. Beneavin Contractors Limited (BCL) argued against the enforceability of the decision on the basis that the adjudicator's...