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Adjudication in Ireland Annual Review 2023: Still undefeated

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Adjudication in Ireland Annual Review 2023: Still undefeated. In this article, Micheál will discuss the recent trends in the industry & more.

As the year end draws near, now is a good opportunity to highlight the progression of adjudication in Ireland throughout the past twelve months as it continues to be the primary, and most effective, form of dispute resolution in the Irish construction industry.  

Helpfully, the Seventh Annual Report of the Chairperson of the Construction Contracts Adjudication (“the Report”) was recently published and it has released key data which provides insight into the operation of the adjudication under the Construction Contracts Act 2013 (“the Act”) in Ireland throughout the past year.  

The Act is a piece of statutory legislation that applies to construction contracts (as defined by the Act) entered into after 25 July 2016 and, amongst other things, it allows parties to a construction contract to commence adjudication “at any time”.  The Act is the law in Ireland, it cannot be circumvented, and its primary purpose is to improve payment practices in the Irish construction industry. 

The Report centres around adjudication appointments made under the Act between the period of 26 July 2022 to 25 July 2023.  In this period, 57 appointments were made.  The key insights into these 57 appointments are as follows:  

  1. 33 adjudications were commenced by a subcontractor claiming against a main contractor.  This was by far the most popular category.  The second highest category (12) was main contractors commencing adjudications against private sector employers.  78% of all adjudications fall into these two categories.  
  2. 30 of the 57 adjudications related to final payment disputes, 26 to interim payment disputes and 2 to “other” (variations and termination) payment disputes.   
  3. 21 of the 57 adjudications had a disputed value of €100,001 – €500,000.  The next leading categories were €30,001 – €50,000 (10), €500,001 – €1m (9) and €50,001 – €100,000 (7).   
  4. In 30 of the 45 decisions issued, the referring party was successful.  9 decisions ended with the referring party being partly successful and in only 6 decisions, the responding party was successful.  
  5. 18 of the 45 decisions were issued within a period of 28 days followed by 16 of the decisions being issued within 42 days and 11 decisions issued within another timescale agreed by both parties.  
  6. 28 of the 45 fees were below a value of €14,999 with the most popular category by far being the range of €5,000 to €9,999.  

The key takeaway from the Report is that adjudication is more complex than you think as only 66% of the referring parties were successful in the claims that they referred.  

Adjudication is a fast and furious process.  It takes more than just a claim document.  Many perceive adjudication to be more difficult than litigation considering that pleading, advocacy, and evidence all need complied into one document that is generally submitted online only.  That is, in most cases, the parties will not speak to, or come face to face with the adjudicator, so the dispute will be decided on what you write.  So, good legal drafting (supported by solid site records) is the key to success.  

Should you be unsuccessful in an adjudication you may: (1) be liable for the adjudicator’s fees; (2) be ordered to pay a significant sum in favour of the responding party; and (3) be unable to adjudicate on the dispute again and will be required to go to arbitration and/or litigation (which are significantly more expensive and longer than adjudication) to have the dispute ultimately decided. Therefore, to take full advantage of the effectiveness of adjudication, parties must be able to fulfil both the entitlement and the quantum burden of their claim. 

Adjudication is the most effective form of dispute resolution available to companies within the industry, but it is still being underutilised.  Main contractors and primary subcontractors are taking advantage of their adjudication entitlement, however, there is still a hesitation from parties lower down the contractual chain to utilise adjudication.  These are the parties that are often subjected to worsened payment practices, for whom cashflow is critical and for whom the Act was designed to protect.  

Adjudication in Ireland is still in its infancy stages (just seven years old!) but the recent development of caselaw in the High Court continues to support the process.  2023 saw three adjudication cases brought before the high court:  

  1. McGurran Civils ROI Ltd v K&J Townmore Construction Ltd; McGurran Civils ROI Ltd v K&J Townmore Construction Ltd (Approved) [2023] IEHC 355 (23 June 2023);
  2. DNCF LTD v Genus Homes LTD (Approved) [2023] IEHC 490 (11 August 2023); and  
  3. K&J Townmore Construction Limited and Damien Keogh -v- Deslend (Mechanical) Limited TA Cobec Engineering Group 2023 – 874JR.  

All three judgements were decided in favour of the Referring Party and so, to date, every adjudication decision brought before the High Court of Ireland has been enforced: this 100% record exceeds that seen in the Technology and Construction Court in the United Kingdom in which c.79% of decisions are enforced.  

The message is clear: the High Court of Ireland backs the adjudication process and attempting to resist an adjudication decision, to date, has proven to be a futile task.  

At Quigg Golden, we are involved in adjudication under the Act on a regular basis both as a party representative for referring and responding parties, as well as in the role of an adjudicator.  We have conducted over 500 Adjudications across multiple jurisdictions ranging from the small (€20,000) to the large (€120 million) and are responsible for securing around €0.5 Billion worth of successful outcomes for our clients over the years.  We currently have four acting adjudicators in our staff (Edward Quigg, James Golden, Claire McCarry and Dermot Durack), this allows us to adopt a holistic approach using our experience from all three sides of an adjudication process to maintain a best practice service.  

You an contact the adjudication experts here.

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