Firm foundations year in review_19-01-16_FB

Adjudication procedure and prompt payment provisions The Minister of Public Works has proposed an amendment to the Construction Industry Development Regulations. The draft amendments to the regulations have been published for public comment and are expected to come into law during 2016. The amended regulations will apply to all construction works contracts or construction works related contracts, whether written or oral and in both the private and public sectors (excluding home building contracts). The definition of such contracts is very broad. The main import of the regulations will be the following: –– A prompt payment provision which will provide the following: –– That a contract may not contain any provision which makes payment to a contractor, service provider or supplier conditional upon the payer receiving payment from a third party. This will be of particular importance to sub- contractors who are entitled to payment from the principal contractor –– That a party to a contract may not withhold payment or part payment unless that party has given notice of intention to withhold payment and has given reasonable grounds, in terms of the contract, for doing so. Where a party is not satisfied with those reasons they

–– A provision for mandatory Adjudication, which will provide that: –– Every construction works contract or construction works related contract must provide for an adjudication procedure for the determination of any dispute –– Where a party is not satisfied with the adjudicator’s decision, that party may refer that dispute to arbitration in accordance with the Arbitration Act or take the decision on review in accordance with the Promotion of Administrative Justice Act –– The decision of the adjudicator is binding and the parties must give effect to that decision, within ten days from delivery of the adjudicators decision, even though a party may intend to refer that dispute to arbitration or to take that decision on review –– Any party to a dispute, may be assisted by or represented at the adjudication by a representative or advisors, including legal representation Parties to a construction works contract or construction works related contract will not be able to contract out of these regulations. The purpose of the regulations is to introduce mandatory adjudication as a fast track mechanism for resolving disputes and to increase cash flow in the construction industry. The regulations are set to have a profound effect on the industry, and all participants need to get to grips with the regulations themselves and the impact that they will have.

may declare a dispute and refer the dispute to adjudication in accordance with the regulations

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