Today, the 25th of July 2016 marks the first day that Adjudication will be the automatic form of dispute resolution for any payment claims made under a construction contract, whether written or oral and no matter what dispute resolution provisions it may contain.
Why all the fuss? In one word - speed. From start to finish the Adjudication process takes 28 days. Before Adjudication, subcontractors had to undertake mediation, then conciliation and then arbitration, which all took over 2 years from start to finish. In speed terms its like moving from a horse to a Ferrari.
For the first time, the pendulum is swinging in favour of subcontractors under construction contracts. Make no mistake this is a very significant day for the construction industry, which up to this point, indulged in unstateable Defences and dubious morals under the protection of contracts which universally endorsed long drawn out dispute resolution provisions. Good for contractors, terrible for subcontractors' cashflow. Now visa versa.
The Order states that the '25th July, 2016 is appointed pursuant to section 12(2) of the Construction Contracts Act 2013 (No. 34 of 2013) and that Act shall apply in relation to construction contracts entered into after that date.' Minister Nash said: “ It will transform the landscape in which the construction sector operates in Ireland.” 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.”