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Ireland's construction payment law under scrutiny

Ireland's construction payment law under scrutiny

Rule Changes
By Newzino Staff |

High Court ruling exposes gap in decade-old legislation designed to protect contractors

February 10th, 2026: Legal Experts Warn of Insolvency Crisis

Overview

Ireland's Construction Contracts Act was supposed to ensure builders got paid on time. For a decade, contractors believed that if a client didn't respond to a payment claim within 21 days, the money was automatically owed. A High Court ruling in January 2026 determined that was never true—the law contains no such automatic payment requirement, and clients can simply ignore bills they dispute.

The ruling in Tenderbids Ltd v. Electrical Waste Management Ltd has exposed what legal experts call a fundamental gap in the 2013 legislation. Contractors now face indefinite payment delays during disputes, with experts warning the decision could trigger widespread insolvencies during the next economic downturn. The law firm HF Construction Ireland has called on the Oireachtas (Ireland's parliament) to amend the Act 'rapidly' before the construction industry's cash flow crisis deepens.

Key Indicators

€1.4M
Disputed payment in test case
Amount Tenderbids sought to recover under a €7 million waste recycling facility contract
21 days
Response window misunderstood
Industry believed non-response triggered automatic payment—the court ruled otherwise
101
Adjudication applications (2023-24)
Record number of payment disputes referred to adjudicators, totaling €42.2 million
35%
Rise in corporate insolvencies
Irish business failures increased year-over-year, with construction among hardest-hit sectors

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People Involved

Justice Garrett Simons
Justice Garrett Simons
Judge, Irish High Court (Presiding over construction payment enforcement cases)
Feargal Quinn
Feargal Quinn
Senator, Legislation Author (deceased) (Died April 2019)
Stephen McKenna
Stephen McKenna
Associate Director, HF Construction Ireland (Legal expert calling for legislative reform)

Organizations Involved

TE
Tenderbids Ltd (trading as Bastion)
Construction Company
Status: Plaintiff in landmark payment dispute case

Dublin-based construction firm specializing in education facilities, retail, commercial, marine, hospitals, and restoration projects.

Electrical Waste Management Ltd
Electrical Waste Management Ltd
Waste Management Company
Status: Defendant in landmark payment dispute case

Irish company that commissioned a €7 million metal waste recycling facility at Rathcoole, County Dublin.

Construction Contracts Adjudication Panel
Construction Contracts Adjudication Panel
Government Dispute Resolution Body
Status: Administering growing caseload of payment disputes

Irish government body that appoints adjudicators to resolve construction payment disputes under the 2013 Act.

Construction Industry Federation
Construction Industry Federation
Trade Association
Status: Industry voice seeking legislative reform

Ireland's leading construction industry trade body representing contractors, subcontractors, and suppliers.

Timeline

  1. Legal Experts Warn of Insolvency Crisis

    Statement

    HF Construction Ireland warns the ruling could force 'a raft of unnecessary insolvencies' and calls on the Oireachtas to amend the Construction Contracts Act 'rapidly.'

  2. Court Rules No Default Payment Obligation Exists

    Legal

    In Tenderbids Ltd v. Electrical Waste Management Ltd [2026] IEHC 5, Justice Simons rules the Act does not create automatic payment obligations when clients fail to respond to claims, rejecting 'smash and grab' adjudications under Irish law.

  3. First Enforcement Refusal: Invalid Notice Service

    Legal

    Justice Simons refuses to enforce the adjudicator's decision, ruling that Tenderbids' email service of notice was invalid when the contract required registered post—the first refusal under the Act.

  4. Tenderbids Seeks High Court Enforcement

    Legal

    After Electrical Waste Management fails to comply with the adjudicator's decision, Tenderbids commences High Court proceedings to enforce the award.

  5. Adjudicator Awards €1.53 Million to Tenderbids

    Legal

    With no response from Electrical Waste Management to the payment claim notice, the adjudicator issues a decision directing payment of €1,531,830.85 within seven days.

  6. Tenderbids Payment Dispute Begins

    Legal

    A payment dispute arises between Tenderbids (trading as Bastion) and Electrical Waste Management over a €7 million waste recycling facility contract at Rathcoole, County Dublin.

  7. Act Finally Comes Into Force

    Regulatory

    After a three-year delay, the Construction Contracts Act 2013 commences operation, establishing the Construction Contracts Adjudication Panel.

  8. Construction Contracts Act Signed Into Law

    Legislative

    The Construction Contracts Act 2013 is enacted, establishing payment notice requirements and a statutory adjudication process for disputes—one of the rare Private Members' Bills to become law.

  9. Senator Quinn Introduces Payment Protection Bill

    Legislative

    Senator Feargal Quinn introduces the Construction Contracts Bill 2010 in the Seanad, seeking to protect subcontractors from payment delays that became endemic during the financial crisis.

  10. Irish Construction Industry Collapses

    Economic

    The property bubble bursts, devastating Ireland's construction sector and triggering mass unemployment and emigration among construction workers.

Scenarios

1

Oireachtas Amends Act to Require Default Payment

Discussed by: HF Construction Ireland, Construction Industry Federation, Irish legal commentators

The Oireachtas responds to industry pressure by amending the Construction Contracts Act to specify that non-response to a payment claim notice within 21 days creates an automatic obligation to pay the claimed amount—aligning Irish law with UK and Australian equivalents. This would restore the 'pay now, argue later' principle the industry believed existed.

2

Economic Downturn Triggers Contractor Insolvency Wave

Discussed by: Stephen McKenna (HF Construction Ireland), industry analysts

Without legislative change, an economic slowdown exposes the practical impact of the ruling. Clients facing cash pressures delay payments by simply disputing claims, even without substantive grounds. Subcontractors with thin margins and heavy reliance on timely payment fail in significant numbers, echoing the post-2008 construction collapse.

3

Industry Adapts Through Contractual Workarounds

Discussed by: Construction law practitioners, contract specialists

Rather than waiting for legislative reform, contractors and their lawyers draft new standard contract terms that explicitly create default payment obligations upon non-response—working around the Act's silence. This creates a patchwork solution that protects sophisticated parties but leaves smaller contractors without legal resources exposed.

4

Status Quo Persists Without Legislative Action

Discussed by: Legal commentators, opposition politicians

Competing legislative priorities and political gridlock prevent timely amendment of the Act. The ruling stands, gradually shifting industry behavior as clients learn they can contest payments indefinitely. Payment culture deteriorates to pre-2013 norms, but without an acute crisis to force action.

Historical Context

UK Housing Grants Construction and Regeneration Act (1996)

1996-1998

What Happened

The United Kingdom passed legislation establishing statutory adjudication for construction payment disputes and requiring 'pay less notices' when clients dispute contractor claims. Failure to issue a valid notice within prescribed timeframes leaves the client liable for the full claimed amount—enabling 'smash and grab' adjudications.

Outcome

Short Term

Adjudication became standard in UK construction, with disputes resolved in 28 days rather than years through litigation.

Long Term

The UK framework became a global model. Australia, New Zealand, Singapore, and Ireland all adopted variations—though Ireland's version lacked the automatic payment consequence.

Why It's Relevant Today

Ireland's 2013 Act was modeled partly on UK legislation but omitted the default payment provision. Justice Simons' ruling explicitly noted that English precedents cannot be applied to Irish law because the statutes differ.

Carillion Collapse (2018)

January 2018

What Happened

Carillion, a major UK construction and outsourcing company, entered insolvency owing nearly £7 billion. The company had been notorious for delayed payments to subcontractors, using their cash to mask its own liquidity problems. It owed £2 billion to 30,000 suppliers and subcontractors.

Outcome

Short Term

The collapse triggered a 20% spike in UK construction insolvencies as the payment crisis cascaded through supply chains. 780 firms failed in Q1 2018 alone.

Long Term

Parliament strengthened payment reporting requirements and renewed focus on supply chain payment practices. The collapse demonstrated how payment delays by major contractors can destabilize entire industries.

Why It's Relevant Today

The Carillion case illustrates the systemic risk that Irish experts warn about: when large clients can delay payments indefinitely, small contractors fail in waves, and the contagion spreads through interconnected supply chains.

Irish Construction Industry Collapse (2008-2012)

2008-2012

What Happened

Ireland's property bubble burst in September 2008, devastating a construction sector that had grown to employ a disproportionate share of the workforce. Subcontractors faced endemic payment delays and defaults as developers and main contractors failed. Unemployment reached 11.4% by May 2009, with construction workers emigrating in numbers not seen since the 1980s.

Outcome

Short Term

Mass unemployment, emigration, and contractor insolvencies. Payment disputes dragged through courts for years.

Long Term

Senator Feargal Quinn introduced the Construction Contracts Bill specifically to prevent a repeat of the payment crisis. The 2013 Act was the legislative response to the 2008 collapse.

Why It's Relevant Today

The 2013 Act exists because of this crisis. Legal experts now warn that the High Court ruling has reopened the vulnerability the legislation was designed to close—just as memories of the collapse fade and another downturn becomes possible.

10 Sources:
+4
The Irish Times Arthur Cox LLP Fieldfisher Byrne Wallace Shields LLP Addleshaw Goddard LLP Irish Statute Book Department of Enterprise, Trade and Employment Mondaq Wikipedia UK House of Commons Library