The client we represented is a Contractor providing mechanical and building services to an Employer in the pharmaceutical industry. This project required our client to extend and retrofit mechanical pipework and equipment to an existing plant which had to remain operational.
Energy and Infrastructure
The value of this contract was €1,955,605
From the outset the project was delayed and disrupted due to the following events:
These events resulted in our client incurring additional costs to the value of €523,000, from which the Employer was only willing to pay €223,000.
After many meetings and several attempts by our client to reach agreement, the Employer refused to engage with our client in any meaningful way and pay the balance due. This put our client under great financial pressure, that he could not sustain.
Our client urgently needed the Employer to engage with them and agree to pay the additional costs incurred.
Before deciding on the course of action to take, we reviewed our clients claims for additional payment to determine the strength of his entitlement. This required us to have an in-depth knowledge of the contract documents and the facts pertaining to each claim. With this, we then had to decide how the Employer could be incentivised to engage with our client and issue payment promptly.
We reviewed our clients’ rights under the contract which deals with payment disputes and relevant legislation. We determined that our clients right to payment were protected by legislation and this payment dispute could be referred to adjudication for resolution within 2 months of referral. We made the Employer aware of the relevant legislation and notified them that if they continued not to engage and not pay a substantial sum towards the additional cost incurred, we would refer the matter to adjudication. We made the Employer aware they could not contract out of adjudication or refuse to engage in the adjudication process.
Three weeks after the Employer was notified of our intention to refer the lack of payment to adjudication, the Employer took the following steps:
Using our clients’ rights under statutory adjudication incentivised the Employer to engage and promptly pay our client.