Adjudication popular in resolving payment disputes

The construction sector is a crucial component of Ireland's economy and “the imperative of a clear legal framework” in which it can work, is “absolutely obvious”, the Attorney General has told the Adjudication Society’s Republic of Ireland conference (14 May).

The event, at Chartered Accountants House in Dublin 2, hosted by William Fry LLC and chaired by Jarleth Heneghan (partner at William Fry and chair of the Adjudication Society of Ireland), also marked ten years since the commencement of the Construction Contracts Act 2013.

Opening remarks were delivered by William Fry chair Liam McCabe, with panels featuring:

• Garrett Breen,
• Sir Vivian Ramsey KC,
• Clare Cashin,
• Damien Keogh SC,
• Alison Carroll,
• Mr Justice Mark Sanfey,
• Éamonn Conlon SC,
• Patricia Hill SC,
• Orla FitzGerald,
• Hamish Lal, and
• Keith Kelliher. 

In his address, Attorney General (AG) Rossa Fanning SC (pictured) said: “When people build things, only rarely does everything go to plan”.

Workable legal rules

This means that “it is necessary to have clear and workable legal rules to fall back on”. 

The AG added: “The 2013 act in Ireland was intended to provide certainty and respect of payment between parties to construction contracts, as well as mechanisms for resolving payment disputes. 

At its core, he said, “the 2013 act is designed around a fairly simple principle, which is that contractors and subcontractors should be paid fairly, promptly and have access to a fast, speedy dispute resolution process in the form of statutory adjudication.”

The AG cited the ninth annual report of the Construction Contract Adjudication Panel, which stated that within the twelve-month period from July 2024, 79 adjudicators were appointed, 37 adjudicators' decisions were issued and the total value of payment disputes was €31.5 million.

This, the AG said “demonstrated that adjudication continues to be an extremely popular method of resolving payment disputes in the Irish construction industry.”

He also addressed the current situation on the Ministerial Panel of Adjudicators, where, following the recent expiry of terms for members, now only the chair Bernard Gogarty remains in place.  

“I understand that a competition for expressions of interest for appointment to a new panel of adjudicators, facilitated by PAS, the public appointment service, is ongoing and is at an advanced stage, and it is expected that new members of the adjudication panel will be appointed in early course, the AG said.

In his presentation on recent case law, John Trainor SC focused on Mr Justice Simons’ decisions in Tenderbids and BMC Renovation Ltd v Gael Property Investments Ltd. 

Unmeritorious claim

He explained that in Tenderbids, the court found that a claim that is bad in law or unmeritorious does not invalidate the payment dispute or deprive the adjudicator of jurisdiction.  

The concept of a payment dispute functions as a gateway mechanism rather than an assessment of merits, once a party is asserting or resisting a claim for payment under the act, the adjudicator has full authority to determine it. 

No retrospective jurisdictional challenge can arise from the outcome, and the court was clear that re-labelling substantive arguments as jurisdictional objections at enforcement stage will not succeed. 

On procedure, Mr Justice Simons found that "the High Court is not a forum to introduce new arguments."

Allowing de novo enforcement hearings would ‘defeat the pay now, argue later principle’, he said.

A full case must be presented to the adjudicator. New issues may only be entertained in exceptional circumstances.

“The ‘smash-and-grab’ was dealt with because he said it transcended the facts of that particular case”, John Trainor SC said.

“It went to the very core of the statutory scheme of adjudication. And that's why he dealt with the issue. It's really exceptional.”

Parliamentary references inadmissible

Trainor went on to say that, “Another interesting thing for lawyers, and not necessarily only those in construction, is the court made it clear that reference to parliamentary debates and explanatory memorandum are generally inadmissible”. 

In BMC Renovation, the court held that a company can never avail of the residential exemption, characterising mandatory adjudication as applying only to "commercial transactions" and not consumer transactions. 

Commercial character

Trainor said this was significant as it may shape how the 200 square metre floor-area threshold is construed in borderline cases, suggesting the consumer or commercial character of the contract overall could be the governing consideration. 

“In considering the natural justice objection, Mr Justice Simons made a number of important observations which I think also are of significance in terms of the development of adjudication law,” the lawyer continued.

On fair procedures, the court reiterated the John Paul threshold — there must be a "blatant or obvious breach such that it would be unjust to enforce" the award. 

On extensions of time, Trainor said, the court drew a clear distinction: section 66 is 'party-driven', with the adjudicator having no function, while section 67 is “adjudicator-driven” but permits only a once-off extension of up to 14 days, a point Trainor stressed as important for practitioners.

“In my view, we have a coherent message that is available to the construction sector – present your full case to the adjudicator, expect the decision to bind and look to the High Court for enforcement,” John Trainor SC concluded.