u003cpu003eIt is a recognized fact that our construction industry is riddled with disputes. Payment default has been an issue that has plagued the industry. The economic downturn in the construction sector has highlighted the lack of formal contractual arrangements and bad payment practices in the sector.u003c/pu003eu003cpu003eDelayed payment, non-payment and conditional payment namely u0026lsquo;pay when paidu0026rsquo; and u0026lsquo;pay if paidu0026rsquo; have and continue to cripple the construction industry.u0026nbsp; The financial problems affecting some construction companies have in turn affected sub-contractors and suppliers further downstream along the construction value chain.u0026nbsp; This is a sad reflection of the construction industry.u003c/pu003eu003cpu003eA recent adventis the concept of Statutory Adjudication.u0026nbsp; This form of dispute resolutionis not new or related to mega construction projects.u0026nbsp; It is a piece of legislation to protect small u0026ndash; medium size specialist contractors, main contractors and consultants alike where payment has been denied by their respective employers.u003c/pu003eu003cpu003eA legislation that streamlines payment procedures.u003c/pu003eu003cpu003eSeveral countries in the world have taken the problem of payment to heart and have enacted specific legislation to deal with disputes of this nature in the construction industry.u003c/pu003eu003cpu003eThe UK first enacted the Housing Grants, Construction and Regeneration Act 1996 some fourteen years ago. The UK Act has been so successful that otherjurisdictions have embraced statutory adjudication. Singapore adopted the Building and Construction Industry Security of PaymentAct 2004. Malaysia enacted The Malaysia Construction Industry Payment and Adjudication Act 2012. Ireland introduced the Construction Contract Act 2013.u0026nbsp; Countries like New Zeeland and Australiau003cbr /u003e have alsoembraced the Adjudication Act.u003c/pu003eu003cpu003eu003cstrongu003eImportance of the Adjudication Actu003c/strongu003eu003c/pu003eu003cpu003eThe Adjudication Acts seek to address the issue of non-payment by better cash flow in 3 key waysu003c/pu003eu003cpu003eu0026bull; First the Acts requirethat all construction contractsinclude a clearpaymentregime.u003c/pu003eu003cpu003eApartfrom a smallnumber of formal standard forms of contracts and conditions, the current arrangement for construction contracts are muchtooimprecise and informal.u003c/pu003eu003cpu003eAs a result, they do offer a cost-effective and timely solution foru003c/pu003eu003cpu003e(i)u0026nbsp;u0026nbsp;u0026nbsp;u0026nbsp; Consultantsu003c/pu003eu003cpu003e(ii)u0026nbsp;u0026nbsp;u0026nbsp; Contractorsu003c/pu003eu003cpu003e(iii)u0026nbsp;u0026nbsp; Sub-contractorsu003c/pu003eu003cpu003e(iv)u0026nbsp;u0026nbsp; Suppliersu003c/pu003eu003cpu003eThe Adjudication Acts provide that where a payment notice is submitted and the amount is contested by the partying party, the paying party has a certain number of days (7-21) to deliver a response setting out the amount that it proposes to pay and the reasons for the difference between that amount and the amount claimed.u0026nbsp; This response must also set out the basis of the calculations used to arrive at the amount paid.u003c/pu003eu003cpu003eIf thus is not agreed between the parties, then the amount paid shall be the amount included in the withholding notice the receiving party can dispute the assessment and refer the matter to adjudication.u003c/pu003eu003cpu003eThe Adjudication Acts provide a fundamental protection by outlawing u0026lsquo;pay when paidu0026rsquo; clauses.u0026nbsp; Even if a party higher up the contractual chain has not been paid this provides no basis for refusing to pay or withholding part-payment from sub-contractors.u003c/pu003eu003cpu003eu0026bull; Second, the right of suspension for non-paymentis put on a statutory footing.u003c/pu003eu003cpu003eThe Adjudication Acts allow a party which has not been paid by the date the payment is due to suspend work. A written notice has to bedelivered to the paying party at least 7 days before the proposed suspension begins.u003c/pu003eu003cpu003eu0026bull; Third and perhaps of particular significance, is the introduction of a fast-track dispute resolution produce through a statutory entitlement to refer disputes relating to payment to adjudication.u003c/pu003eu003cpu003eAdjudication provides a speedy and cost-effective means of dispute resolution.u0026nbsp; The decision of the adjudicator is binding unless it is overturned by the courts or by an arbitrator depending on the agreed dispute resolution forum within the particular construction contract.u003c/pu003eu003cpu003eThis means that where an adjudicator decides that payment is due, that payment must be made.u003c/pu003eu003cpu003eu003cstrongu003eMauritius Adjudication Actu003c/strongu003eu003c/pu003eu003cpu003eu0026bull; The Adjudication Act will give a party to a construction contract the right to referany dispute to adjudication u0026lsquo;atany timeu0026rsquo;u003c/pu003eu003cpu003eu0026bull; The adjudicator has a mandated-short time frame to reach a decisionu003c/pu003eu003cpu003eThe adjudicator must reach a decisionwithin 28 days of the date that the referralis madeu003c/pu003eu003cpu003eMost adjudicators are likely to be over in a matter of weeksu003c/pu003eu003cpu003eConclusionu003c/pu003eu003cpu003eStatutory Adjudication will transform dispute resolution in construction. The real value is that it provides a quick answer which must be complied with.u0026nbsp; This will ensure that an answer to a dispute over payment will be arrived atquickly and money will flow.u003c/pu003eu003ch3 style=color: blue; text-align: center;\u003eProfile of Kailash Dabeesinghu003c/h3u003eu003cdiv style=color: blue;\u003eKailash Dabeesingh is a Chartered Arbitrator.u0026nbsp; He has been involved in a number of arbitrations both in Mauritius and overseas.u0026nbsp; He also serves as an adjudicator on Dispute Adjudication Boards to help the construction industry in the resolution of disputes and conflict avoidance. Mr. Dabeesingh worked in the UK with leading construction companies and served in various capabilities in a number of prestigious projects. Besides being a Civil Engineer, he has gaineda Master degree in Architecture at the University College London (UCL) and a Master degree in Construction Law and Arbitration at Leeds MetropolitanUniversity.u0026nbsp; He also studied international arbitration at Keble College, University of Oxford. Mr. Dabeesingh is actively involved in promoting alternative dispute resolution in Mauritius and is a frequent speaker atboth national and international conferences.u003c/divu003e
Statutory adjudication in the construction industry
