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Court backs adjudicator’s interest calculation

The High Court has backed a decision on interest payments made by an adjudicator in a dispute over a construction contract. 

The judgment found that, where an adjudicator’s decision includes a calculation of interest, that basis of calculation can remain in force after enforcement proceedings have finished. 

Mr Justice Garrett Simons was ruling on the enforcement of an award made by an adjudicator under the Construction Contracts Act 2013, which was set up to settle disputes over payments in the construction sector more quickly.

Status of decisions

Solicitor Bernard Gogarty, chair of the Construction Contracts Adjudication Panel, commented that the ruling should serve to accentuate the higher status granted to adjudicators decisions in section 6(11) of the Construction Contracts Act 2013.

Enforcing the decision in Finnegan Contracts v Killycard Developments, the judge found that there was nothing in the adjudicator’s decision that would cause any concern on the part of the High Court. 

Interest-payment approach 

Mr Justice Simons said, however, that an issue had arisen from the adjudicator’s approach to the payment of interest by the respondent. 

The adjudicator had fixed a rate of €38.10 for each continuing calendar day. 

Mr Justice Simons stated that the court should give effect to that rate of interest, for two reasons. 

“The first reason is that this best reflects the underlying rationale and objective of the Construction Contracts Act 2013, which is to give full effect to the adjudication process and to treat an adjudication award as if it were enforceable pro tem [for the time being] as a judgment or order of the High Court,” he said. 

The judge added that, in this context, the adjudicator’s award of interest was analogous to the rate of interest fixed under a contract. 

“In circumstances where there is no suggestion that the adjudicator did not have jurisdiction to impose the interest rate, nor that the rate is penal or otherwise disproportionate, it seems to me that the rate should continue post-judgment,” he concluded. 

‘Discrete legal development’ 

Lawyers for Byrne Wallace Shields LLP, which acted for the applicant, explained that the established position, when the court made an order involving the payment of an adjudicator’s award, was that late-payment interest would apply at the rate specified by section 26 of the Debtors (Ireland) Act 1840. 

“This meant that the interest-payment mechanism set out by an adjudicator’s decision would accordingly be displaced by the mechanism prescribed by the Debtors (Ireland) Act upon the enforcement of the decision by the High Court,” they stated. 

“Though this represents a narrow precedent in future adjudication-enforcement proceedings, it should be noted that this approach remains substantially untested,” the Byrne Wallace Shields lawyers said. 

“Despite this, the court’s deference to the authority of an adjudicator on the issue of what rate of interest is to be applied is a discrete legal development that helps refine the parameters of adjudication under the act and the enforcement of adjudicators’ decisions in Ireland,” they concluded.