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From €10k to €10m: How Adjudication is Shaping Ireland’s Construction Industry

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Adjudication in Ireland. How it's shaping the industry. Micheal O'Shea reviews 'The Report' with comments on the key message.

December saw the publishment of the Eighth Annual Report of the Chairperson of the Construction Contract Panel (“the Report”).  The purpose of the Report is to provide a yearly insight into the use of Adjudication under the Construction Contracts Act 2013 (“the Act”) within Ireland’s construction industry.

To provide some background context, the Act has two main components for construction contracts; firstly, to provide standard payment timeframes and payer response procedures that must be met in a construction contract and secondly to provide parties with a statutory entitlement to adjudication to resolve payment disputes.  Its intent is to encourage prompt and fair payments in our industry.

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 1000 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 on 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.

If you are interested in learning more about Quigg Golden’s adjudication process and would like to speak to an adjudication expert in Ireland or the UK, then please get in touch here.

Let’s look into what this year’s report contained along with the key message.

This Years Report

This year’s Report covered the period of July 2023 to July 2024 and the key takeaways from it are set out below:

  1. Adjudication is now more popular than ever in Ireland. 93 appointments were made in the last year, which was a 62% increase from the same period last year;

 

  1. Despite there being 36 more adjudication appointments this year, the total value of payment disputes decreased to €42.2m. Interestingly, in 2021 there was only 37 adjudication appointments, but the total disputed value was €55.5m.  These trends suggests that adjudication has become more accessible to lower value disputes in Ireland which is encouraging to see.

 

  1. Subcontractors continue to lead the way in referring disputes to adjudication, with 46% of all adjudications being commenced by subcontractors against main contractors. The next leading category was main contractors commencing adjudications against private employers’ accounting for 36% of all adjudications.  This was a sharp increase from last year’s report; however, Government employers still appear to be well protected by the stringent provisions and conciliation procedures in public works contracts as they were involved in just 8% of all adjudications last year.

 

  1. The nature of disputes remained largely unchanged to previous years with final account disputes leading the way accounting for 46% of all disputes. Similarly, interim payments and “other” payments accounted for 42% and 12% respectively.

 

  1. The leading value of payment disputes remains to be €100k – €500k with 39% of all disputes falling within this category but this year but there was a notable upturn in larger value disputes with 23 disputes above the value of €1m being referred to adjudication.

 

  1. There was a marked increase in the number of occasions in which the responding party was successful in defending a claim. Last year, responding parties were only successful in 13% of adjudications.  This year this figure increased to 28%.  This is likely because more and more responding parties are engaging legal experts to represent them in adjudication proceedings.  Despite this, on the balance of probabilities, it is still more likely for a referring party to achieve a successful result if it commences an adjudication with it receiving a successful or partly successful decision on 71% of disputes.

 

  1. There were 22 occasions in which the Adjudicator awarded €0. This highlights the risks of adjudication as the Referring Parties in this occasion would have been liable for the entirety of the Adjudicator’s fees, their own legal costs and would be required to proceed to arbitration or litigation to have the dispute ultimately determined.  It is suspected that a large number of decisions within this category related to technical payment notice adjudications as the law in Ireland continues to remain uncertain in this area.  Nonetheless, there were many substantial awards with 41 decisions over the value of €100k being awarded.

 

  1. There was a marked increase in the fees charged by adjudicators with over €40k being charged on five occasions. In comparison the highest fee charged last year was €39k. The reasonability of this approach cannot be assessed without understanding the context of each individual dispute, but on the whole, adjudicators fees are on the increase.  Despite this increase, it is encouraging that 61% of the fees charged were below €16k.

 

  1. One further high court judgement was issued in 2024: McGill Construction Limited-v-Blue Whisp Limited [2024] IEHC 205. This brings the total construction adjudication related cases heard in the High Court to 11.  At this stage, adjudication still remains undefeated, and every decision brought before the High Court to date has been comprehensively enforced.

The Message

The message from this year’s report is clear, adjudication is continuing to grow in Ireland.  A key reason for this is its accessibility and speed.  Disputes can be decided in as little as 28 days, ensuring that cash flow is maintained, and projects continue without prolonged financial strain.  Subcontractors, who are often most vulnerable to payment delays, have increasingly turned to adjudication as a means to secure their outstanding payments.

Notably, simply the threat of adjudication prompted a settlement on 11 occasions highlighting the power of adjudication as a negotiation tool. Contrary to similar legislation in other jurisdictions, issuing a Notice of Intention to Adjudicate under the Act is not linked to the submission of a Referral Notice and so strict procedural timelines will not be enforced upon the Referring Party when issuing a Notice of Intention to Adjudicate.  This in turn affords parties a greater opportunity to settle the dispute before substantive submissions are made.

However, the success of an adjudication claim or the success of defending an adjudication claim, relies on the proper preparation and presentation of your case.  Engaging experienced legal representation is vital to ensure compliance with the Act and maximise the chances of success and prepare clear, persuasive submissions that meet the evidentiary and procedural requirements of adjudication.  Without proper legal guidance, parties’ risk unfavourable outcomes, such as paying the adjudicator’s fees, significant financial penalties, or being forced into more expensive dispute resolution procedures such as litigation or arbitration if they want to dispute an unfavourable adjudication decision.

Ultimately, adjudication offers a powerful tool for fair and swift dispute resolution, but expert legal support is fast becoming essential for optimal results.

For expert legal advice of this nature, please contact Micheál O’Shea at: micheal.o’shea@h-f.co.uk

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