• No set off against a payment claim to be allowed unless notified in a timely payment response.
• “Pay when paid” and conditional payment provisions will be unenforceable, including in relation to nominated sub-contracts.
• Parties who have not been paid an amount admitted as due in a payment response or decided as due by an adjudicator will be entitled to suspend or slow down works and will be entitled to additional costs and extensions of time to compensate them for any resulting delays.
• Either party to a contract will be entitled to refer disputes arising in relation to payment claims to adjudication within 55 working days (or a longer period agreed by the parties). There is a 28 calendar day time limit for commencing adjudication once a right to adjudicate arises.
• Parties are free to agree adjudicator nominating bodies in their contracts.
• Adjudicators’ decisions to be enforced in the same way as court judgments without set off or deduction and allowing paying parties only a short period within which to challenge the enforceability of a decision.
The Report also sets out a number of issues on which divergent views were received and which require further consideration, as follows:
• Whether private sector coverage should be limited to contracts for “new buildings” with a main contract value in excess of HK$5million.
• Whether SOPL should apply to oral (and partly oral) as well as written contracts.
• Whether SOPL should apply to professional services contracts.
• The setting of appropriate maximum permissible payment periods and whether there should be different periods applicable to interim and final payments. The setting of the maximum period to be allowed to payers to respond to a payment claim.
• Whether payers who fail to serve a timely payment response should or should not be automatically liable to pay the full amount of the relevant payment claim.
• Whether parties should be entitled to refer disputes in relation to extension of time under the contracts to adjudication.
• Whether a better process/procedure is needed for appointment of an adjudicator and referral of the dispute to the adjudicator once a notice of adjudication is served.
• Whether parties should only be able to agree an adjudicator after a dispute has arisen or whether it would be better if they could do so in their contracts or after their contracts are entered into.
• Whether the default nominating body should be HKIAC or whether a different or other bodies should be able to carry out default nominations of adjudicators.
Joseph Chung - Partner at Deacons, Hong Kong
Joseph specialises in litigation and dispute resolution with particular emphasis on construction. He has extensive experience in all aspects of construction in both private and public sector work, advising developers, contractors and consultants.
To learn more about Joseph, visit the firm's website.