Significant’ High Court backing for adjudication in construction – Law Society of Ireland Gazette

What is adjudication?

Adjudication is a 28-day dispute resolution process which can be used to resolve disputes relating to payment under construction contracts. The key steps involved are:

Adjudication is designed to be rapid.

It is designed to promote cashflow in the construction industry by giving aggrieved parties a mechanism to get cash in the bank quickly without spending years (and lots of money) in arbitration or court.

This rapid mechanism only works, however, if the courts are willing to enforce decisions made by adjudicators; otherwise, unsuccessful parties would simply ignore decisions made against them.

The adjudicators decision at the centre of this case concerned a payment dispute between Gravity Construction Limited and Total Highway Maintenance Limited (TMS).

In short, TMS lost and was ordered to pay Gravity 135,458.92.

TMS did not comply with the decision, and Gravity then issued court proceedings to enforce the decision in the High Court. Gravity relied upon section 6(11) of the 2013 act which states:

The decision of the adjudicator, if binding, shall be enforceable either by action or, by leave of the High Court, in the same manner as a judgement or order of that Court with the same effect and, where leave is given, judgement may be entered in the terms of the decision".

Just before the High Court hearing date, TMS indicated that it was prepared to comply with the adjudicators decision.

The High Court enforced the adjudicators decision by giving an unless order. Paragraph 37 of the judgement summarises it:

An order that the applicant has leave to enforce the adjudicators decision in the same manner as a judgement or order of the High Court, and that judgement is to be entered against the respondent in favour of the applicant in the sum claimed unless the said sum is paid to the solicitors acting on behalf of the applicant within seven days of todays date

In other words, the High Court ordered TMS to comply with the adjudicators decision.

This is the first reported case in which the High Court has put its shoulder behind adjudication by enforcing an adjudicators decision under section 6(11) of the 2013 act.

Without support from the High Court, adjudication awards would not be worth the paper they are written on. The decision is therefore very significant indeed.

That said, the whole point of adjudication is speed. Adjudication is about getting aggrieved parties paid quickly. In this regard, the timelines in Gravity give cause for concern.

The adjudicators decision at the heart of the proceedings was dated 28 April 2020. It took almost nine months to enforce. So, does this protracted timeframe defeat the purpose of adjudication entirely? Well yes, it probably does.

There were a number of reasons why it took so long to enforce the adjudicators decision in Gravity:

The points summarised above might sound familiar to adjudication practitioners who have experience in the UK, where there were similar teething problems.

Ultimately, these were resolved by reforms within the court system. In the UK, the courts now enforce adjudication decisions by way of summary judgment, with enforcement hearings taking place roughly 28 days after a procedural application.

If adjudication is going to become a mainstay in Irish construction, we will need reform within the court system to facilitate this. The courts need to rapidly enforce adjudication awards if the process is to have a long-term future in Ireland.

Another barrier to the uptake of adjudication in Ireland was also touched upon in Gravity. At paragraph 32 of the decision, the High Court briefly touched upon one of the legal arguments raised by TMS to resist enforcement.

In short, TMS put forward an argument that the enforcement proceedings should be stayed (put on hold) pending determination of arbitration proceedings.

In this regard the High Court noted that the propriety of this attempt was open for debate, given the wording of section 6(10) of the act, which says: The decision of the adjudicator shall be binding until the payment dispute is 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 adjudicators decision.

The UK regime has a similar provision, but, in that jurisdiction, there is no debate as to what it means. It means pay first, argue later. Do what the adjudicator says in the first instance, and if you are unhappy about it, start from afresh in arbitration or court.

For constitutional reasons however, the position might not be as clear-cut in Ireland, so that debate still needs to be had.

I have no doubt that we will see the debate above unfold in the Irish courts in the very near future.

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Significant' High Court backing for adjudication in construction - Law Society of Ireland Gazette