Construction and Engineering
Dispute resolution
PUBLIC WORKS CONTRACTS
Amendments have been made to public works contracts with the intent of improving dispute management in public construction projects. Measures are designed to encourage early resolution, allow for appointment of Standing Conciliators to chair Project Boards on major projects, and maintain fast-track arbitration alongside options for more complex cases.
Taking contract PW-CF1 as an example, amendments focus on Clause 4.1 (Co-operation). The parties must support reciprocal co-operation for the Contract purposes; such support may be relevant to several items, which now include the avoidance of disputes.
There is a mechanism for convening a “Co-operation Meeting”, which is a without prejudice meeting to facilitate early engagement and dispute avoidance between the Employer and the Contractor (and Standing Conciliator where appointed). A senior representative of each of the Employer and the Contractor shall attend any Co- Operation Meeting. The objective is to become aware and informed of the relevant matter and its potential impact, make and consider proposals to minimise the impact of any relevant matter, record any agreed actions, and facilitate the avoidance of a dispute.
Upon agreement to convene a Co-Operation Meeting and commence a period of reciprocal co-operation, notice requirements and timelines under Clauses 10.3 (Contractor Claims), 10.5 (Employer’s Representative’s Determination) and 10.9 (Employer’s Claims) are suspended (save for any initial notice under clauses 9.3.1, 10.3.1 or 10.9.1).
Under Clause 10.1 (Compensation Event), upward adjustment of the Contract Sum is subject to the Contractor’s reasonable efforts to avoid and minimise the adverse effects of the Compensation Event including, where reasonable, through engaging in reciprocal co-operation under Clause 4.1.
Clause 13.1 (Dispute Management Procedure) is amended to provide for the Project Board to have the Standing Conciliator, where one has been appointed, chair the Project Board meetings.
The arbitration rules to be used with public works contracts are available here: Arbitration Rules v1.4. An updated Guidance Note 3.1.1 is to follow.
Taken together, these amendments signal a shift towards a culture of structured early engagement, embedding co-operation as a contractual obligation rather than a post-dispute remedy. This is a reform that places process discipline and senior-level accountability at the centre of conflict prevention on major public construction projects.
MEDIATION
The delivery of a landmark High Court judgment, alongside the issue of a new High Court Practice Direction, indicates that the Courts have the power to order parties to mediate, even where a party is unwilling, where proportionate to do so.
Parties should ensure that mediation is properly considered before proceedings are issued. Parties who unreasonably refuse to engage with mediation remain exposed to adverse costs consequences. Our website briefing on these developments is available here: A landmark judgment and new practice direction.
ADJUDICATION
The High Court in Ireland granted an application to enforce an adjudicator’s decision in a case which provided helpful clarification on the “residential occupier exception” to a contract being a construction contract for the purposes of the Construction Contracts Act 2013. We looked at that judgment in Construction Law Update: Adjudication judgment confirms that a company cannot avail of the residential occupier exception.
In the UK, the case of RBH Building Contractors Ltd v James & Anor [2026] EWCA Civ 511 has also considered this exception, specifically the interpretation of where one of the parties “intends to occupy” the dwelling as his residence, wording also used in the Irish Construction Contracts Act 2013. The Court set out principles for determining whether a party “intends to occupy”, which are summarised below.
- The burden of proof is on the party seeking to trigger the statutory exception.
- Intention is a question of fact, which may be capable of being determined on a summary basis, given that the threshold is not high.
- There must have been the intention to occupy at the time that the contract was made.
- There are two elements to the test. The first is whether there is a bona fide intention to occupy in the future. That is largely a matter of subjective intent. Evidence of subjective intent can be accompanied by evidence which, viewed objectively, supports the existence of that subjective intention. Contemporaneous material expressing / acknowledging the intention to occupy when the works are complete may be of particular value. The second element is whether the person who wishes to occupy has a realistic, rather than a fanciful, prospect of bringing that occupation about.
- The intention to occupy must have a temporal aspect. It cannot be sufficient for the employer to intend to occupy the property after letting it out for 20 years; there must be an intention to occupy within a reasonable time after the completion of the works.
UK judgments such as this have persuasive, not binding authority in Ireland, and need to be considered in light of Irish legislation and caselaw.
Performance security
RETENTION
The Commercial Payments Bill (PDF 3.2 MB) is currently making its way through the UK Parliament. The Bill addresses commercial payment practices across the UK, including by introducing a phased ban on retention clauses in construction contracts.
The Bill provides for a “transition period” of two years beginning with the day on which the relevant provisions come into force, and a “last retention day” falling at the end of a three-year period beginning on that same day. Retention clauses agreed during the transition period become ineffective on the last retention day. Any retention clause agreed after the end of the transition period is immediately void.
A “retention debt” arises where a sum has been deducted or retained as a retention and the payer has failed to comply with its obligation under the Housing Grants, Construction and Regeneration Act 1996 to pay the notified sum by the final date for payment (that is, where no valid pay less notice has reduced that obligation, and the sum nonetheless remains unpaid). In other words, the debt crystallises when a retention is withheld in circumstances where payment of that sum was required to have been made.
Where a retention debt arises after the end of the transition period, the party to whom it is due is entitled to recover the retained sum, together with a fixed sum of the higher of £40 or 50% of the retention debt. These entitlements are in addition to any statutory interest and compensation for late payment under the Commercial Payments and Interest on Late Payment Act 1998. Any contract term purporting to exclude or vary the right to the fixed sum is void.
The Bill would also introduce caps on payment terms: where the purchaser is a public authority, the final date for payment must fall within 30 days beginning with the day after the payment due date. Where the purchaser is not a public authority, a period of 60 days applies.
The provisions on retention would not extend to Northern Ireland. Retention remains a feature on construction projects in Ireland.
Infrastructure
CRITICAL INFRASTRUCTURE
The Critical Infrastructure Act 2026 has been signed into law by the President without changes from the Bill as initiated, which we looked at in our Insights Blog post here: Accelerating Infrastructure: Critical Infrastructure Bill and Circulars.
Minister Chambers also announced further changes to support accelerated infrastructure delivery, namely Circular 24-2026 Benefits Realisation Framework for Infrastructure, and Best Practice KPI Guidance for Regulators of Critical Infrastructure.
AFFORDABLE HOUSING ACT
Adoption by the European Commission of a proposal for an Affordable Housing Act has been scheduled for September 2026. The initiative was announced in the European Affordable Housing Plan and is intended to support public authorities to identify areas of housing stress and enable them to take measures to protect and promote housing affordability in those areas, including by simplifying administrative procedures such as planning and permitting.
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