Adjudication in the Republic of Ireland – The Insight
Adjudication has become a staple of dispute resolution in the British and Northern Irish construction industry since its introduction into law in 1996. A large body of case-law has been developed in these jurisdictions and construction professionals have become very familiar with the adjudication process and have learnt to trust it.
The Irish response to these developments in the United Kingdom came nearly eighteen years later via the Construction Contracts Act 2013 (“the Act”) which came into force in July 2016. The later introduction of adjudication in Ireland has meant that the first enforcement decision in Ireland was only in 2021 and thus, the Irish courts have significant ground to cover in terms of questions of interpretation of the Act. In the real world, what this means is that the adjudication process is perhaps less ingrained into the industry’s culture in Ireland, and, in our experience, construction professionals are oftentimes slightly more sceptical about exercising their statutory right to adjudicate. Although, its popularity is increasing. This article aims to provide a quick look at how adjudication operates in Ireland and what the benefits are of this process in the commercial world. We hope you enjoy ‘Adjudication in the Republic of Ireland: The Insight’.
Adjudication is a 28-day dispute resolution procedure which can be used to resolve dispute relating to payment under construction contracts. The process can be summarised as follows:
A payment dispute crystallises. What this means is that the parties are in a clear disagreement as to the sums owed. It might mean that negotiation has failed but really it only requires one party to have asked for something and the other to have denied it.
The aggrieved party will then serve a “Notice of Intention” to refer the dispute to adjudication. The aggrieved party is thereby referred to as the “Referring Party” and the party to whom the notice was served is the “Responding Party”.
Once the notice has been served, the parties can agree on an adjudicator, failing which the Referring Party writes to the Construction Contracts Adjudication Service to seek the appointment of an adjudicator. One key difference between UK adjudication and Irish adjudication is at this stage of the dispute. In the UK an adjudicator must be appointed within 7 days, however in Ireland there is no time limit and appointment will depend on availability. However, it usually takes less than two weeks.
Within seven days of the adjudicator’s appointment, the Referring Party must submit its “Referral Notice”. This is essentially a document which sets out the detail of the Referring Party’s case.
Thereafter, there is a series of submissions from both parties to the adjudicator.
The adjudicator will review the submissions and evidence given to them by the parties and they must reach a decision within 28 days, subject to any extensions that might be granted.
Once the decision is given, it is immediately enforceable, but can always be changed by negotiation or final dispute resolution through litigation or arbitration. However, most adjudication decisions end up resolving the dispute finally for the parties.
Under sections 6 (10) and 6 (11) of the Construction Contracts Act 2013, the decision of an adjudicator is not final and conclusive. Rather, the decision is open to be overturned by arbitral or court proceedings. The legal effect of an adjudicator’s decision is to impose an obligation to make a payment in the interim – the “pay now, argue later” mechanism. However, a party may be able resist the enforcement of an adjudicator’s award where they can demonstrate that there has been an obvious breach of fair procedures such that it would be unjust to enforce the decision, even on a temporary basis. However, courts impose a high threshold for any such resistance, so parties must assume the immediate payment obligation will apply.
The ultimate goal of adjudication is to provide the quick resolution of disputes to protect cash flow in the supply chain – because cash is king. Each year the Ministerial Panel of Adjudicators in Ireland must produce an annual report, this report demonstrates just how effective adjudication has been in achieving this goal. The most recent report reveals that in between 2018 and 2021 well over 100 disputes were referred to adjudication, and in 2021 63% of the disputes were valued between €50,000 and €1 million, and 25% of the disputes were valued at over €1 million. The increasing uptake of adjudication paired with the value of the disputes being referred is a clear indicator that confidence in the process is being won. Further, most of these adjudications were decided in 28 – 42 days, demonstrating that the process is remaining true to its essence. This timeframe is extremely expedited compared to litigation or arbitration which can take years and eat up huge amounts of fees for the parties. Although because it is compressed, there can be a very intense period dealing with issues. Making it happen smoothly is often something that benefits from professional help.
Adjudication is an extremely effective process, when used properly. It should only be undertaken subject to a full risk assessment of the individual case and the application of expert advice. Quigg Golden has the advantage of over twenty years of adjudication experience as we have been partaking in adjudications for our clients since its inception in the UK, and we even have two practicing adjudicators in our expert cohort. Furthermore, as many of our team our dual qualified, we can provide both the construction and legal expertise required for a successful adjudication. Our experience is spread across smaller matters to multi-million euro disputes.
The article article ‘Adjudication in the Republic of Ireland: The Insight’ was featured in our latest Insight magazine. You can view the magazine in its entirety here.
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