Courts and tribunals
Are there any specialised tribunals that are dedicated to resolving construction disputes?
There are no specialised tribunals dedicated to construction disputes.
Mediation, conciliation, arbitration and litigation are the most common methods of construction dispute resolution in this jurisdiction. Contractual adjudication and expert determination are also used. The Construction Contracts Act 2013 provides for statutory adjudication of payment disputes arising under certain construction contracts entered into after 25 July 2016. Otherwise, parties are generally free to agree in contract how their disputes will be resolved.
Dispute review boards
Are dispute review boards (DRBs) used? Are their decisions treated as mandatory, advisory, final or interim?
Dispute review boards can be used where the contract so provides. Conciliation is often used in public works contracts (which are used for infrastructure projects funded by the state). Conciliation involves an independent third party encouraging active engagement between the parties. A standing conciliator will be appointed to act in all disputes in a public works contract with a value over €10 million and, if a dispute is referred to the standing conciliator, it will issue a recommendation if there is no agreement between the parties within the agreed time limit. This recommendation will become binding unless either party expresses their dissatisfaction with the recommendation in accordance with the contract within the agreed time limit.
Under certain contracts where a party has been awarded a sum of money by a conciliator’s recommendation and puts a financial bond in place, that party is entitled to be paid the sum awarded by the conciliator and to hold that sum pending the outcome of the next stage of the contractual dispute resolution process. If there is no agreement by conciliation, the dispute is dealt with by the next stage of the contractual dispute resolution process.
Mediation
Has the practice of voluntary participation in professionally organised mediation gained acceptance and, if so, how prevalent is the practice and where are the mediators coming from? If not, why not?
Yes, the use of mediation has gained acceptance.
The Mediation Act 2017 (which came into force on 1 January 2018) aims to further promote mediation as an attractive alternative to court proceedings. It obliges solicitors before issuing court proceedings to advise their clients to consider mediation and to provide information on the mediation services available and the possible advantages of mediation. It also allows refusal by a party to consider the use of mediation to be taken into account when determining costs at the end of legal proceedings.
Mediators are often practising solicitors but there is no requirement that they are solicitors or barristers. There is independent training and certification for mediators from a number of bodies.
Confidentiality in mediation
Are statements made in mediation confidential?
The format of mediation is subject to agreement between the parties and the mediator. It is standard practice for mediations to be held on a confidential, without prejudice, basis and for parties to be prohibited from using another party’s material in subsequent litigation.
Arbitration of private disputes
What is the prevailing attitude towards arbitration of construction disputes? Is it preferred over litigation in the local courts?
Arbitration is preferred to court litigation in construction disputes. Arbitration clauses are often included in construction contracts. The Arbitration Act 2010 (as amended) (the 2010 Act) applies to all arbitrations commenced after 9 June 2010, and the UNCITRAL Model Law has the force of law in Ireland (subject to the 2010 Act). The Irish courts are very supportive of arbitration.
While court challenges to an award are possible, the grounds for challenges are very limited.
The parties can agree on the identity of the arbitrator or on a number of arbitrators to form a tribunal. Construction contracts generally provide for a default appointing mechanism, which typically involves an application by either party to the president of a named professional body (eg, Engineers Ireland) requesting that he or she appoint an arbitrator.
Article 19 of the Model Law confirms that the parties are entitled to set their own procedures for the arbitration. If no rules are chosen, and the parties cannot subsequently agree upon how the procedure is to be conducted, then the tribunal can set the procedures.
As the effects of Brexit do not extend to arbitration, UK-based arbitration clauses will continue to have full effect. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Ireland, EU member states and the UK are signatories, governs the enforcement of arbitral awards and maintains the status quo in this area. This may result in arbitration becoming an even more attractive option for dispute resolution than litigation.
Governing law and arbitration providers
If a foreign contractor wanted to pursue work and insisted by contract upon international arbitration as the dispute resolution mechanism, which of the customary international arbitration providers is preferred and why?
The International Chamber of Commerce Arbitration Rules are utilised in Ireland, and the London Court of International Arbitration is also gaining some prominence. For construction in Ireland, there is a preference for the governing law to be Irish law and for the seat of the arbitration to be in Ireland.
Dispute resolution with government entities
May government agencies participate in private arbitration and be bound by the arbitrators’ award?
Yes, government agencies may participate in private arbitration and be bound by the arbitrators’ award.
Arbitral award
Is there any basis upon which an arbitral award issued by a foreign or international tribunal may be rejected by your local courts?
Ireland is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has the force of law in Ireland (subject to the 2010 Act).
The Irish courts have shown a supportive approach to the enforcement of arbitral awards. Enforcement is not generally problematic, unless there is reason to deny enforcement (the grounds for which are set out in article 36 of the Model Law and in the New York Convention).
In a leading case, the High Court held that the Irish courts would not exercise jurisdiction over an application for the enforcement of an arbitral award where the party against whom enforcement was sought had no assets in Ireland and no real likelihood of having assets in Ireland (Yukos Capital SARL v Oao Tomskneft Vnk Otkytoye Aktsionernoye Obshchestvo ‘Tomskneft’ Vostochnaya Neftyanaya Kompania [2014] IEHC 115, in which the authors acted for the successful party, the respondent).
Limitation periods
Are there any statutory limitation periods within which lawsuits must be commenced for construction work or design services and are there any statutory preconditions for commencing or maintaining such proceedings?
Generally, the time limits for bringing a claim under a construction contract are governed by the Statute of Limitations Act 1957 (save to the extent that a construction contract specifically provides otherwise). If the contract is signed by hand, the parties have six years to bring the claim from the date of accrual of the action, and if the contract is a deed, the parties have 12 years. If the parties are bringing a claim in tort, they have six years from the date on which the incident occurred.
Recent case law in Ireland has discussed the issue of when the cause of action accrues. In Brandley v Deane [2017] IESC 83, Mr Justice McKechnie set out that the limitation period runs from when the damage (not the defect) becomes ‘manifest’ (ie, capable of being discovered by a plaintiff). This decision affirms the judicial approach whereby defective work and resultant damages are distinguished in determining limitation periods.
Source: Lexology / Matheson
