3 October 2005
Ireland's construction industry is one of the largest sectors in the economy and provides high levels of employment and collateral benefit to a vast array of businesses.
The twin drivers of the industry have been the large increase in housebuilding and extensive investment in infrastructure to make up for decades of neglect. Perhaps the most telling statistic underpinning both of these areas of growth is the fact that the number of people in employment in Ireland has increased from approximately one million 10 years ago to just under two million today. Housing completions are running at approximately 70,000 per annum, although the rate of growth is abating. Investment in infrastructure has seen a national roadbuilding programme, a €450m (£305.5m) motorway tunnel underneath Dublin from the port to the outer ring-road, a €700m (£475.2m) tram system in the capital and one of the world's most sophisticated waste water treatment plants, also in Dublin, at a cost of around €350m (£237.6m).
The typical contract forms used for building and engineering work are the Royal Institute of the Architects of Ireland (RIAI) form and the Institution of Engineers of Ireland (IEI) form. The RIAI form remains similar in layout to the 1963 Royal Institute of British Architects (Riba) form, although the Irish drafters reacted much more quickly than their UK colleagues to the trenchant comments of the House of Lords in Bickerton v Northwest Metropolitan Hospital (1970) and Westminster City Council v John Jarvis & Sons (1970), which were concerned with the then current provisions on nomination of subcontractors.
The IEI form of contract currently in use is very similar to that of the Institution of Civil Engineers' (Ice) Fifth Edition. There is no standard form of design and build contracts in Ireland for either building or engineering work. The RIAI form is usually amended for design and build work where appropriate, and on occasion the Joint Contracts Tribunal (JCT) WCD 98 form is amended for use in Ireland. It will be interesting to see if the JCT Major Projects form is employed. On infrastructure projects, it is common to find the International Federation of Consulting Engineers (FIDIC) forms of contract employed.
Despite the similarity of the building process and the contract forms in use, there has been major divergence between Ireland and England on the subject of dispute resolution in recent years. There has been no equivalent of the Latham Report in Ireland and no major legislative overhaul such as that contained in the UK Housing Grants, Construction and Regeneration Act (HGCRA) 1996. There is no statute-based adjudication procedure and, although parties can contractually agree such a procedure, it is infrequently seen in Ireland. Equally, the statutory system in the UK for withholding under Section 111 of the HGCRA is unknown in Ireland. The general position under building contracts is that there is no set-off against certified sums without special provision in the contract.
There has also been no overhaul of the civil procedure rules like the Woolf reforms in England and Wales. The rules of civil procedure in Ireland are similar to those in England and Wales prior to the introduction of the Civil Procedure Rules (CPR). The High Court has jurisdiction over disputes in excess of €38,000 (£25,800) and the Court of Appeal in civil matters is the Supreme Court. The beginning of 2004 has seen the inception of a Commercial Court in Ireland, which generally deals with disputes in excess of €1m (£680,000). The court is considered to be a resounding success.
The forms of contract mentioned generally all provide for arbitration, which is the typical route for addressing construction disputes. Conciliation is usually a contractual prerequisite to arbitration. The perception of conciliation in this country is similar to that in the UK - if it is undertaken voluntarily by the parties, its chances of success are greater than when mandated by contract.
The default route is arbitration. The Arbitration Act 1954 is similar to the English act of 1950. There has been no updating in line with the English 1996 legislation, although the UN Commission on International Trade Law (Uncitral) model was introduced for international arbitrations by way of legislation in 1998. Ireland is a signatory to the 1958 New York Convention.
Those familiar with the English act of 1950 will be aware of a significant reduction in judicial involvement in arbitrations pursuant to the 1996 act. The powers of the arbitrator under the Irish 1954 act are subject to judicial scrutiny to a certain degree. The role of the arbitrator can be, and often is, expanded by agreement between the parties. For instance, the IEI Arbitration Procedure 2000 provides a comprehensive code for arbitration which gives the arbitrator a broad range of powers and which, if employed, virtually excludes recourse to the courts. One interesting issue is the extent to which an arbitrator is obliged to apply the law of evidence. There are mixed views on this question and it can obviously be addressed by contract.
The main appointing bodies for arbitrators in construction disputes are the RIAI and IEI. Those on the RIAI panel are exclusively architects and those on the IEI panel are generally engineers and lawyers. It is fairly common to agree appointments beyond the RIAI and IEI panels of arbitrators.
The conduct of construction arbitrations in this country is relatively similar to that of the UK. Delay and disruption claims are where much of the action is and the same issues on pleading delay and disruption claims arise here as elsewhere. English authorities such as Eric Cumine v Wharf Properties and ICI v Bovis are looked at with interest on the issue of global claims, although it is important to note that in Ireland the standard of particularisation of claims is generally not as rigid as that which forms the backdrop to cases such as Eric Cumine v Wharf Proper-ties. The Irish standard is set by the Supreme Court decision in Magee v O'Reilly (1996) which requires parties to plead in broad outline, and there is generally no obligation to plead subordinate facts. This can make it difficult to attack global claims at the pleading stage, but a true global claim can often run into difficulties at the later stages of a reference.
The Society for Construction Law's delay protocol sets out some very interesting and topical considerations for dealing with delay claims. The society has a branch in Ireland which is well supported, although the delay protocol has not generated very much debate here. There are some controversial provisions of the protocol, which could be said to allow contractors to advance claims on an entitlement, rather than an actual cost basis. If parties do incorporate the delay protocol into their contracts, then it will determine the procedure for addressing delay. In circumstances where the protocol is not a contract document, it is difficult to see where it would have relevance in a construction arbitration in Ireland.
The construction industry in Ireland continues to develop at a rapid pace and a feature of this development is the presence here of UK and other foreign contractors. Many construction professionals in this country have also worked in the UK and elsewhere, and the repatriation of specialist skills has contributed to the growth of a sophisticated industry. As the sector continues to mature, we may find ourselves looking at Latham Report-style initiatives and the experience in the UK since the introduction of the 1996 HGCRA.
Rory Kirrane is a partner in the construction team at Mason Hayes & Curran