Ways to challenge the adjudicator’s decision
The procedures is similar to that apply to contracts for public works (CPW) before the Act came into force.
Separate from this Act, where the State enters a Public Works Contract, there is provision therein for reference of disputes to a project board (where representatives of relevant parties sit) then a conciliator.
In Kelly’s of Fantane Ltd. v. Bowing Construction Ltd.  IEHC 526 the parties entered a building agreement. The plaintiff succeeded in getting summary judgment for the sum awarded in conciliation notwithstanding that the defendant could follow that up with arbitration and later upset that award.
The Act was commenced 25/7/16. The Act provides for a payment claim notice to be sent by the contractor, and a response by the employer, all within a short time frame. It allows for suspension of works where money is not paid.
At any stage, any dispute relating to payment arising under the construction contract can be referred to adjudication. The parties will have 5 days to appoint an adjudicator, failing which, same will be appointed from a panel. The referrer than has 7 days to make a referral to the adjudicator appointed. The adjudicator will decide the matter within 28 days of referral, unless the parties consent to an extension.
S. 6 provides inter alia:-
“10.The decision of the adjudicator is final until the payment dispute if 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 adjudicator’s decision…
12. The decision of the adjudicator, if binding, shall, unless otherwise agreed by the parties, be treated as binding on them for all purposes and may accordingly be relied on by any of them, by way of defence, set-off or otherwise, in any legal proceedings.”
The logic of this section is that the adjudicator will make a quick, efficient decision on payment. If the employer is unhappy with that decision, it can sue in arbitration for a return of this money, or part of the money, or can challenge the adjudicator’s decision by judicial review. My reading of the italicised part of s.6.10, combined with s.6.12, is that court proceedings would only overcome the adjudicator’s decision if they are court proceedings in relation to the adjudicator’s decision and not other court proceedings where the payment is in issue, but this will be a matter for interpretation of these sections by the courts. Certainly it would seem safer to challenge by arbitration. S.108.3 of the Housing Grants Construction and Regeneration Act 1996 in the UK provides “the determination.. is binding until the dispute is finally determined by legal proceedings, by arbitration…or by agreement” and is broadly worded in this respect.
To what extent will judicial review be successful
The UK have similar legislation in the 1996 Act as above. The English courts have shown a great deference to decisions of adjudicators. In Carillon Construction ltd. v. Devonport Royal Dockyard Ltd. 2006 BLR 15 the court held that a challenge will only be successful if the adjudicator answered the wrong question or the manner in which he went about the task was obviously unfair. In C&B Scene Concept Design Ltd. v. Isobars Ltd. 2002 EWCA Civ 46 the court held that the natural justice braches must constitute material breaches, such as if the adjudicator failed to bring a point relied on to the attention of one of the parties. In ABB Limited v. BAM Nutall Ltd. 2013 EWHC 1983 a challenge was successful where the adjudicator relied on a clause not mentioned by either party and did not invite comment or evidence in relation to the clause.
Northern Ireland has similar legislation in The Construction Contract (NI) 1997 as amended. In Northern Ireland the challenges to the award have included that the dispute did not concern a construction contract or that the adjudicator’s decision was issued out of time (Coleraine Skip Hire Limited v. Echomesh Ltd. 2008 NIQB 141 – challenge failed), that there was no crystallised dispute between the parties because the project manager had not been given adequate time and documentation to decide if the works were complete (Gilson Banbridge Ltd v. Fermanagh District Council 2013 NIQB 16 – challenge failed) or that the adjudicator acted in breach of natural justice in allowing only seven days for the defendant to respond (Gilson Banbridge Ltd v. Fermanagh District Council – challenge failed).
Some commentators opine that the Irish courts will be more vigilant in guarding fair procedures. There is support in East Donegal Cooperative v. Attorney General 1970 IR 317 that the adjudicator must comply with fair procedures. There is authority that an adjudicator should not rely on matters not put to the parties if the matters are of substance and significance (Idakheua v. Minister for Justice 2005 IEHC 150 in the context of a refugee appeal tribunal review). By analogy with some FSO cases, there may be a requirement to have an oral hearing where there is a conflict of fact that cannot be resolved on paper (most recent case O’Neill v. FSO High Court 27/5/14). There is support for the proposition that the decision of the adjudicator should have reasons (Mallak v. Minister for Justice 2002 IR 297). Certainly the Act requires the adjudicator to act impartially (s.6.8) and the code of practise defines impartiality and conflict of interest. The code of conduct also allows the adjudicator invite submissions. Neither the Act, nor the code of practise, requires an oral hearing or cross-examination.
Decisions in relation to judicial review of the financial services ombudsman, the private residential tenancies board and the refugee appeals tribunal, will all be cited in support of an application for judicial review. Relevant factors will include that there is no appeal from the adjudicator’s decision, unlike some of those other Acts, but the parties can go to arbitration if there is an arbitration clause. Certainly, if I am right in my interpretation of s.6.10, and there is no arbitration clause, this heightens the importance of the adjudication. Another factor is the short time frame of 28 days for the adjudicator’s decision.
Application for a set off or a stay
Section 6.11 envisages that the adjudicator’s award is enforceable by the High Court in same same way that a High Court order is enforceable.
The defendant may argue set off in those enforcement proceedings. Northern Irish courts have been slow to allow set off against the amount awarded by the adjudicator unless the adjudicator’s award provides for same or there is an sum of damages owed by the plaintiff, liquidated and ascertained on or before the date of the adjudicator’s award (Charles Brand Ltd v. Donegal Quay Ltd 20 10 NIQB 67)
The defendant may ask for a stay on the order pending a separate claim by the defendant, such a claim for defective works. The English courts sometimes grant a stay where the plaintiff is insolvent or will be unable to pay the sum claimed by the defendant if the defendant is successful, unless the plaintiff is in the same financial position was in when the contract was initially made or the plaintiff’s financial position was caused by the defendant’s failure to pay. One solution has been to grant a stay on condition that the defendant pay the sum awarded (or a portion of the sum awarded ) into escrow account or into court.
It remains to be seen what level of success there will be in judicial review applications.
A defendant will find it hard to argue setoff unless their claim is clearly ascertained at date of adjudication.
A defendant might be more successful getting a stay where it can show the plaintiff is impecunious but might have to lodge a sum in court pending it’s claim.
The content of this article is intended to provide a general guide to the subject matter and is not intended to be a substitute for legal advice. Specialist advice should be sought about your specific circumstances.