‘Smash and grab’ ruling underlines Irish differences in construction contracts

The High Court’s rejection of UK‑style “smash and grab” adjudications confirms that a payer’s failure to respond does not create an automatic entitlement to the sums claimed, given the absence of any statutory “notified sum” concept in the Irish Act.

The High Court ruled (pdf/38 pages, 330kb) that a decision by an adjudicator in determining that the employer’s failure to deliver a response to the payment claim notice triggered an entitlement, on the part of the contractor, to payment in full had been made in error.

Catherine Burns, construction specialist at Pinsent Masons, said the ruling would provide important clarification on the interpretation of the Act

“It confirms that in Ireland, there is no statutory concept for payment in default - meaning that a failure to issue a pay less notice under s4(3) of the Act is not necessarily going to be fatal to an employer’s ability to challenge the sum claimed by a contractor in a payment claim notice,” she said.

“Importantly, the court has rejected importing the UK style ‘smash and grab’ adjudication into Ireland and instead a payment dispute should be determined on its merits, as substantiated.”

It comes after the court, as part of the same factual dispute, previously refused to enforce the decision of an adjudicator after ruling that – as the contractor, Tenderbids, had not followed required procedures – the adjudicator had no jurisdiction on the case.

“It is important that a party seeking to refer a payment dispute to adjudication in Ireland follows the contractual notice requirements exactly,” said Zara West, a litigation specialist with Pinsent Masons in Ireland.

“Failure to do so will result in an adjudicator failing to have the jurisdiction to determine the dispute, and the referring party will need to start again, which may have strategic disadvantages to their case.”

In this second instance, Tenderbids claimed it was entitled a decision in its favour by the adjudicator – a sum of around €1.4million plus VAT – having issued a payment claim notice under a construction contract for a €7 million metal waste recycling facility project in Dublin, and receiving no response to the payment claim notice contesting the sum claimed.

The adjudicator had decided that, as the employer had not responded to the payment claim notice within 21 days, as required under the Act, the contractor was due full payment. 

The High Court overturned the adjudicator’s decision on the basis that the Act does not specify the consequences for non-response to a payment claim notice, therefore, it was not permissible for the courts to read in or imply such a consequence.

“There is no concept of a ‘notified sum’ under the Irish Act,” explained Burns.

“Instead, an unanswered payment claim notice can give rise to a ‘payment dispute’ suitable for adjudication, but the payee must still substantiate its entitlement on the merits.”

She added the High Court ruling has reinforced that Irish adjudication is a substantive merits process, not a procedural shortcut, and that payment disputes can still be referred where no response is issued.

“Contractors must prove entitlement, and adjudicators must engage with the underlying valuation,” said Burns.

“In doing so, the court has strengthened the integrity and balance of the Irish regime, ensuring adjudication remains a fast, fair mechanism rather than a tool for procedural windfalls.”