Ireland: Construction Contracts Act 2013 (The Act). To What Extent Will The Adjudicator’s Decision Be Open To Challenge.

Last Updated: 23 September 2014
Article by Stephen O’Sullivan

The Act has not been commenced yet. The Act provides for a payment claim notice to be sent by the contractor, and a response by the employer, all within a short time frame. It allows for suspension of works where money is not paid.

At any stage, any dispute relating to payment arising under the construction contract can be referred to adjudication. The parties will have 5 days to appoint an adjudicator, failing which, same will be appointed from a panel. The referrer than has 7 days to make a referral to the adjudicator appointed. The adjudicator will decide the matter within 28 days of referral, unless the parties consent to an extension.

S. 6 provides inter alia:-

"10.The decision of the adjudicator is final until the payment dispute if finally settled by the parties or a different decision is reached on the reference of the payment dispute to arbitration or in proceedings initiated in a court in relation to the adjudicator's decision...

12. The decision of the adjudicator, if binding, shall, unless otherwise agreed by the parties, be treated as binding on them for all purposes and may accordingly be relied on by any of them, by way of defence, set-off or otherwise, in any legal proceedings."

The logic of this section is that the adjudicator will make a quick, efficient decision on payment. If the employer is unhappy with that decision they can sue in arbitration for a return of this money or part of the money or can challenge the adjudicator's decision by judicial review. My reading of the italicised part of s.6.10 combined with s.6.12 is that court proceedings would only overcome the adjudicator's decision if they are court proceedings in relation to the arbitrator's decision and not other court proceedings where the payment is in issue, but this will be a matter for interpretation of these sections by the courts. Certainly it would seem safer to challenge by arbitration. Certainly the s.108.3 of the Housing Grants Construction and Regeneration Act 1996 in the UK provides "the determination.. is binding until the dispute is finally determined by legal proceedings, by arbitration...or by agreement" and it more broadly worded in this respect.

To what extent will judicial review be successful

The UK have similar legislation in the 1996 Act as above. The English courts have shown a great deference to decisions of adjudicators. In Carillon Construction ltd. v. Devonport Royal Dockyard Ltd. 2006 BLR 15 the court held that a challenge will only be successful if the adjudicator answered the wrong question or the manner in which he went about the task was obviously unfair. In C&B Scene Concept Design Ltd. v. Isobars Ltd. 2002 EWCA Civ 46 the court held that the natural justice breaches must constitute material breaches, such as if the adjudicator failed to bring a point relied on to the attention of one of the parties.

Some commentators opine that the Irish courts will be more vigilant in guarding fair procedures. There is support in East Donegal Cooperative v. Attorney General 1970 IR 317 that the adjudicator must comply with fair procedures. There is authority that an adjudicator should not rely on matters not put to the parties if the matters are of substance and significance (Idakheua v. Minister for Justice 2005 IEHC 150 in the context of a refugee appeal tribunal review). By analogy with some FSO cases, there may be a requirement to have an oral hearing where there is a conflict of fact that cannot be resolved on paper (most recent case O'Neill v. FSO High Court 27/5/14). There is support for the proposition that the decision of the adjudicator should have reasons (Mallak v. Minister for Justice 2002 IR 297). Certainly the Act requires the adjudicator to act impartially (s.6.8) and the code of practise defines impartiality and conflict of interest. The code of conduct also allows the adjudicator invite submissions. Neither the Act, nor the code of practise, requires an oral hearing or cross-examination.

Decisions in relation to judicial review of the financial services ombudsman, the private residential tenancies board and the refugee appeals tribunal, will all be cited in support of an application for judicial review. Relevant factors will include that there is no appeal from the adjudicator's decision, unlike some of those other Acts, but the parties can go to arbitration if there is an arbitration clause. Certainly, if I am right in my interpretation of s.6.10, and there is no arbitration clause, this heightens the importance of the adjudication. Another factor is the time frame.

It remains to be seen what level of success there will be in judicial review applications.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Stephen O’Sullivan
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