No “Smash and Grab”: Irish High Court on Default Construction Adjudication Awards

What You Need to Know

The Irish High Court¹ (Mr Justice Simons) has clarified that, in a construction adjudication, where a respondent does not reply to an initial payment claim notice, the legislation does not empower an adjudicator to issue a default award, and so a defaulting respondent can still defend the claim on its merits at the adjudication.

The decision clarifies a longstanding uncertainty in the industry whether, as in the UK, an adjudicator in those circumstances should issue a ‘default’ decision for the full value of the claim.

Construction Adjudication

The Construction Contracts Act 2013 (the “Act”) established a swift, interim, claims dispute procedure for construction contracts (including sub-contracts) termed adjudication. The architecture provides for a “pay now, argue later” scheme where claims are assessed by an independent adjudicator appointed by the parties under expedited timeframes, with the decision provisionally binding unless and until it is displaced by a subsequent arbitration, proceedings or settlement of those claims.

The intent is to ensure that value flows down the construction contract structure and cashflow reaches suppliers of materials and services promptly, where margins are typically lower and delays in payment existential. If a respondent does not pay the award, the claimant may apply to the Irish High Court for leave to enforce it (i.e. convert the award into a court judgment and then proceed to use the court mechanisms to collect the value of the award.)

Specific court rules and a practice direction were introduced and a dedicated judge appointed, to manage these enforcement applications. There now exists a significant body of caselaw interpreting the Construction Contracts Act.

In particular, the Irish High Court has stressed that once the claimant’s proofs are in order, leave to enforce the award will be granted save for exceptional cases where the adjudicator did not have jurisdiction (e.g. the claim was not a “payment dispute” under the Act) or there was an obvious or blatant breach of fair procedures in the adjudication such that it would unjust to enforce the award.

The court does not review or rehear the merits of the claim— an aggrieved respondent should instead pay up in the interim and pursue a recoupment at arbitration, proceedings or by a settlement.

The architecture is analogous to those in other common law jurisdictions, though the Irish High Court has been at pains to emphasise that procedures and interpretations of those systems in caselaw should not be simply “read across” to the Irish adjudication scheme.

One scenario that has arisen in other jurisdictions is “smash and grab” adjudications, where the respondent has not replied to the payment claim notice and so is either deemed to have accepted the claim in full or is barred from subsequently disputing it on its merits resulting in the adjudicator granting a “default” award for the full value of the claim.

The respondent must then pay the award and proceed to arbitration or proceedings if it wants to raise its defences and recoup some or all of the payment.

The fairness of the “smash and grab” scenario was considered, and the default award enforced, in an earlier Irish decision², but slightly different arguments were made in that case and so the question remained open.

Background Facts

The claim related to a contract in respect of the construction of a metal waste recycling facility at Tay Lane, Greenogue, Rathcoole, Dublin. The construction contract was in the form of an RIAI Blue Form with a contract sum of €6,986,339.73 plus VAT.

The contractor had previously served a payment claim notice on 17 May 2024. The employer failed to deliver any response to this payment claim notice. Following the refusal of the application to enforce the first adjudicator’s decision, the contractor served a (fresh) notice of intention to refer a payment dispute for adjudication on 18 March 2025.

That notice described the payment dispute as predicated exclusively on the failure of the respondent to respond to the payment claim notice. The respondent accepted that it did not reply and that this meant it was precluded from defending the claim on its merits. The adjudicator’s decision allowed the full value of the claim on that basis.

Subsequently, when the claimant sought to enforce the award, the respondent changed its position and sought to challenge the award on fair procedures grounds, specifically that there is no provision under the Act for a default award.

The High Court was reluctant to entertain this defence as, ordinarily, a respondent is precluded from raising new arguments in an enforcement application that it could and should have raised in the underlying adjudication. In addition, the respondent had actively conceded the possible defence in the adjudication. Exceptionally, because the issue was of systemic importance to the adjudication scheme, with impacts that transcended the instant claim, the court proceeded to consider the legal defence.

Decision

The court considered section 4 of the Act, and specifically the sub-sections dealing with responses to payment claim notices. The court noted that the purpose of such responses is to allow the claimant to understand the rationale on which the claim is being resisted and to delineate the parameters of the payment dispute and so assist the preparation of the adjudication referral.

The court noted that the Act is silent on the consequences of a failure to respond to a payment notice. Importantly, the position is different in England and Wales, where the legislation expressly provides that if a respondent fails to deliver a response or pay less notice, a default award is made and the respondent can only commence a second adjudication for a “true value” of the works once it has paid the award in full.

The court had regard to the Act as a whole and considered what may be implied by the silence as to consequences to respond to a payment claim notice. The claimant argued that the legislature intended: (1) that a respondent pay the claim unless a response was delivered; and (2) to deprive a respondent of its right to defend a claim at adjudication for its failure to deliver an earlier response, and that these outcomes were intended based on the “pay now, argue later” purpose of the Act.

The court had sympathy for this argument but identified several potential implied consequences of increasing severity — from obliging the respondent to pay, to precluding a respondent from disputing the claim on its merits in an arbitration or proceedings. In these circumstances, the court refused to “read in” a default award as it would undermine fair procedures without legislative authority.

Result

The default decision by the adjudicator, unsupported by the Act, was an error of law. Normally, an error of law by an adjudicator would not be a bar to enforcement of the award. However, the error here (a default award) went to the very core of, and compromised the fairness of, the adjudication process. On that basis, the court refused to enforce the adjudication award. It did however, signal costs consequences for the respondent due to its change of position in the particular case.

Further Information

For further information, please liaise with your usual Maples Group contact or the person listed on this page.