As we approach the end of 2023, we look back at the main developments in relation to adjudication. The year saw further clarity brought to the Construction Contracts Act 2013 (the ‘Act’) with the High Court delivering judgment in three cases concerning adjudication. There is undoubted support from the High Court regarding the adjudication process.

The year saw something for all involved in adjudication. Parties to the adjudication process can have confidence that should enforcement proceedings be necessary, the court will deal with enforcement swiftly. In one matter the enforcement procedure took under one month from start to finish.

Adjudicators have also benefited. The court has clarified that an adjudicator’s role does not include advising the parties on the proofs required to succeed in an adjudication. However, the court warned that if an adjudicator goes off on a frolic and reaches a decision by reference to material not advanced by either side, this may breach fair procedures.

Finally, lawyers got some clarity on the role of judicial review in relation to adjudication, a topic which had given rise to some debate in legal circles. However, those who favoured judicial review as the forum for challenging an adjudicator’s jurisdiction faced a setback. The court concluded that enforcement proceedings offered an ‘appropriate’ and ‘alternative’ remedy to judicial review.

We had a busy year in terms of adjudication, having acted for contractors, sub-contractors and employers. We acted for Referring Parties on more occasions than for Responding Parties. Disputed values ranged from €10,000 to multi-million-euro disputes. Generally, we have found that our clients are not as reluctant to start an adjudication as perhaps they were when the process was initially introduced some years back. We have also found that our clients are more familiar with the process than in the past.

This year saw the launch of our adjudication blog – Adjudication Insider. We also created a dedicated page on our website about adjudication and continued to build our database of adjudicator’s decisions, which has proved very useful.

We have set out below some of our selected quotations from the judgments delivered in the past year and refer to some other materials that may be of interest.

June

On 23 June 2023, in McGurran Civils (ROI) Limited v K&J Townmore Construction Limited [2023] IEHC 355, the High Court delivered judgment enforcing two adjudicator’s decisions relating to the same parties but on two different construction projects. Of note in this judgment is the speed at which enforcement took place with the court noting that:

… there would be little practical benefit to an expeditious adjudication process if there were to be significant delays thereafter in the enforcement of an adjudicator’s award.

August

In August, in DNCG Ltd v Genus Homes Ltd [2023] IEHC 490, the court considered whether an adjudicator is under a positive obligation to request further and better particulars in relation to the positions advanced by the parties. The court confirmed that adjudication is not an iterative process, and that an adjudicator is not under a positive obligation to invite the parties to elaborate upon their submissions to shore up their positions. The court noted that:

The fundamental flaw with the employer’s argument is that it necessitates regarding adjudication as an iterative process, whereby the adjudicator is under a positive duty to invite the parties to elaborate upon their submissions. This is not what the law requires.

It is not a matter for an adjudicator to “advice proofs” for any party. On the facts of the present case, the onus lay with the employer to put forward such evidence as it thought fit to substantiate its defence. There was no obligation upon the adjudicator to assist the employer to make its case.

An adjudicator does not have a role in cajoling the parties to elaborate or improve upon their cases.  The adjudicator was entitled, consistent with fair procedures, to reach a decision on the basis of the materials put before him by the parties.  The adjudicator was not obliged to enter into a dialogue with the employer nor to invite the employer to shore up its defence by adducing further evidence.  Indeed, there would be no such obligation on a court of law to do so in similar circumstances.

Later in August, in K&J Townmore Construction Limited v Keogh [2023] IEHC 509, the court dealt with the question of whether a challenge to an adjudicator’s jurisdiction should take place before the adjudication process, by way of judicial review, or after the adjudication process, by way of enforcement proceedings.

A sub-contractor referred a payment dispute to adjudication against a contractor. An adjudicator was duly appointed. The contractor invited the adjudicator to resign on the grounds that the dispute was not a payment dispute as defined in the Act. The adjudicator issued a non-binding decision concluding that the adjudication would proceed. By way of judicial review, the contractor sought an order quashing the adjudicator’s decision to continue with the adjudication. The court concluded that:

… the High Court has made it clear that jurisdictional disputes regarding an adjudicator appointed under the 2013 Act are dealt with at the enforcement proceedings stage of the adjudicative process. For this reason, it seems to this Court that this is the ‘appropriate’ and ‘alternative’ remedy that exists for jurisdictional challenges, rather than a standalone judicial review of the adjudicative process.

it seems to this Court that the intention of the 2013 Act is to provide for a speedy and relatively cheap way of resolving construction disputes (relative, that is, to the very significant cost of High Court litigation). If this means that judicial review is not available to [the contractor] to challenge the Adjudicator’s jurisdiction in advance, but that it must challenge that jurisdiction as part of the enforcement proceedings after the adjudicator’s decision, this appears to be a price, which the Oireachtas regards as worth paying for a cheaper and quicker alternative to litigation.

… permitting a party to a construction contract dispute to impose expensive and slow litigation, in the form of judicial review, on this process would run completely contrary to the intention of the Oireachtas, as well as providing an incentive for employers/main contractors to delay payments to building contractors by judicially reviewing the adjudication process.

October

The Construction Contracts Service published the Seventh Annual Report of the Chairperson of the Construction Contracts Adjudication Panel. This report provides an overview of the statistics and data on the applications and appointments of adjudicators under the Act for the period from 26 July 2022 to 25 July 2023. The report shows that there were 57 appointments by the Chairperson. However, this number does not include appointments, which were agreed by the parties. Most disputes were between sub-contractors and main contractors. The Chairperson concluded that:

7.2 The number of applications and Adjudicator appointments made in the seventh year since the Act came into force is the second highest to date. This illustrates that parties to construction contracts are pursuing their rights under the Act to seek redress for non-payment or underpayment.

7.4 It is important that Employers, main contractors and subcontractors adhere to their obligations set out in the Construction Contracts Act, 2013. I would also point out that if  a party to a construction contract, as defined under the Act, is contemplating referring a  payment dispute for adjudication, all appropriate procedures required under the Act and the ‘Code of Practice Governing the Conduct of Adjudications’ should be followed.

November

In November, the Contractual Law Journal published an article written by one of our team. The article, ‘The Construction Contracts Act 2013: A Critical Lacuna?‘ (2023) (39)(8) Const. LJ discussed whether failure to issue a response to a payment claim notice under s.4(3) of the Contracts Act 2013 gives rise to a default payment often referred to as ‘smash and grab.’ Consideration was given to the definition of a ‘payment claim’ in the context of the approaches to statutory interpretation and whether a distinction should be drawn between contracts with a contract administrator and those without. A copy of the article is available upon request.

The year ahead

We expect adjudication to gain further traction in 2024 and that the court will continue to consider and clarify matters concerning the adjudication process. One matter that has generated debate over the last few years is whether smash and grab adjudication is permissible under the Act. A seminar, which took place during the year, demonstrated that opinion on that topic is divided. Perhaps this is one of the topics that the court will address in the year ahead?

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Photo of Paul Hughes Paul Hughes

Paul Hughes is a senior associate in A&L Goodbody’s Construction & Engineering group. Paul has extensive experience in construction disputes and acts for employers, contractors and sub-contractors across multiple sectors, including, civil engineering, residential, commercial, educational, refurbishment, repair and maintenance and energy. Paul…

Paul Hughes is a senior associate in A&L Goodbody’s Construction & Engineering group. Paul has extensive experience in construction disputes and acts for employers, contractors and sub-contractors across multiple sectors, including, civil engineering, residential, commercial, educational, refurbishment, repair and maintenance and energy. Paul has expertise in disputes concerning extensions of time, loss and expense, defects, variations, payments, final accounts, true valuations, termination and asbestos. Paul has experience of dealing with disputes arising under the standard forms of contract, including, JCT, NEC, FIDIC, PWC & RIAI and ancillary agreements. Paul holds a PhD (Law) and is a solicitor in both Ireland and England and Wales. He is also a Fellow of the Royal Institution of Chartered Surveyors (FRICS), the Society of Chartered Surveyors Ireland (FSCSI), the Chartered Institution of Civil Engineering Surveyors (FCInstCES) and the Chartered Institution of Arbitrators (FCIArb).