Minister for Department of Jobs, Enterprise and Innovation, Jed Nash, has today signed the 'Construction Contracts Act 2013 (Appointed Day) Order 2016' which means that the Act and adjudication will apply to all construction contracts entered into after 25 July 2016.
That means that Adjudication is mandatory for all payment claims from 25 July 2016 whether you have a contract in writing or not. You cannot contract out of adjudication. No more 'pay when paid' clauses. Now you can suspend works if unpaid, but not when you start adjudication.
Adjudication is the dispute resolution process overseen by an adjudicator who makes a decision, which is binding unless a party challenges that decision in the High Court or in arbitration.
Adjudication means that sub-contractors will get adjudication decisions within 28 days of starting the process. Adjudication is designed to improve cash flow in the lower end of the construction industry where disputes have tied payments up for years.
There is an option to extend the 28 day time limit by 14 days but only where the referring party consents.
The next step will be for the Code of Practice which accompanies the CCA to be signed by the Minister. It has been indicated by the Department of Jobs, Enterprise and Innovation that this will happen in the coming weeks.
The Minister added: “The changes to the way applicable construction contracts will now be drawn up will guarantee payment to sub-contractors at regular intervals during the life of a contract, and in addition, the legislation provides for a statutory adjudication service which entitles parties involved in a payment dispute to seek to resolve the matter through adjudication. This will take place in a short time period – the Act envisages 28 days.”