The COVID-19 pandemic caused severe disruption to every sector of the Irish economy and the effect of the shutdown on the construction sector in particular looks set to be felt for some years to come. Following the broad reopening of the construction sector earlier this year, the country has witnessed a boom in construction-related activity, notwithstanding supply and logistics issues. Broadly speaking, those with the financial wherewithal to purchase a home pre-pandemic are less likely to have been significantly impacted by the result of the economic whirlwind of the last 18 months. The significant pre-existing excess of demand over supply in the residential housing market has therefore been exacerbated by a year of relative inactivity in the construction sector.
Historically and for obvious reasons, levels of construction disputes rise and fall with the level of construction activity. In the 18 months prior to COVID-19, dozens of cases issued in the Irish High Court related to the five largest Irish construction companies alone. The Chair of the Construction Contracts Adjudication Panel recently published a report for the period to July 25, 2020, showing an increase in applications to the Construction Contracts Adjudication Service of approximately 40%, from 39 to 54. In the previous year, only 11 applications had been made.
Given the complex nature of construction relationships, including the importance of reputation in a sector like construction in a small country, many disputes are eventually resolved through Alternative Dispute Resolution (ADR), by way of processes such as arbitration, mediation, conciliation, or since 2013, through adjudication. These ADR mechanisms each have their own specific advantages and disadvantages depending on the factual context and each continues to serve as a useful forum for the resolution of commercial disputes. Adjudication in particular (under the Construction Contracts Act 2013) has proven to be a preferred process for relatively straightforward or smaller construction disputes, leading to rapid decisions, often within a matter of weeks and always with strict time limits.
The popularity of adjudication had in turn resulted in increased pressure on the Commercial List of the High Court (commonly referred to as the Commercial Court), where enforcement of adjudication decisions worth over €1m took place. Given the strong emphasis of the Commercial Court on speedy case resolution through active case management and strong timelines, recent decisive action by the High Court has led, as of April 26, 2021, to the creation of a new list (court division) specifically for the enforcement of adjudicator decisions in construction disputes (https://www.courts.ie/content/applications-pursuant-construction-contracts-act-2013). The list, managed by Mr. Justice Simons of the High Court, will help to maintain the efficiency of the adjudication mechanism and lead to the speedy enforcement of construction adjudicator decisions.
In summary, whilst not every case may be suitable for adjudication or be at a level where the Commercial Court would have jurisdiction, the relative speed of this process can make it an attractive option for the resolution of construction-related disputes where time and/or costs are of the essence. Sub-contractors in particular can face cashflow challenges on otherwise profitable engagements, making adjudication a potentially prudent option. Furthermore, the creation of a specific High Court list for the enforcement of adjudicator decisions means that many cases can be dealt with in a comparably short space of time, likely within a matter of months.
For advice on whether a dispute is suitable for this process, or any other construction-related disputes in Ireland, please contact our Irish construction lawyers, Sam Saarsteiner (ssaarsteiner@clarkhill.ie), or Andrew McFadden (amcfadden@clarkhill.ie) of our Dublin office.
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