The current economic climate is creating difficulties for many businesses in the construction sector. Regrettably, late payment or even total refusal to pay is now an all too common occurrence.Every business in this situation will have to decide how best to proceed in these circumstances. It may be the case that continued negotiation is seen as the best way to try to unlock payment.
Alternatively, a party may seek to utilise its contractual rights, which commonly include referring the matter to the project engineer or even arbitration for a decision, reference to a Dispute Adjudication Board or attempting some form of amicable settlement. Regardless of how payment is sought, however, a party’s position will always be strengthened if it has provided a comprehensive submission document in support of its case.
A party’s position will always be strengthened if it has provided a comprehensive submission document in support of its case.
This will also help to avoid jurisdictional challenges that allege there is no existing dispute because the case has never been accurately presented to the responding party. The following suggestions provide some general guidance as to the most important elements that should be included in such a submission document.
Place the dispute in context
It is always useful to set out the background to the matter in dispute. This will include the details of the relevant contract, the parties to it, the subject matter and the agreed cost and payment basis. This is particularly the case if the submission is to be read by a third party.
Confirm relevant contract terms
Most disputes concerning late or non-payment are essentially breach of contract claims. It is therefore very important that all parties are fully aware of the relevant terms of the contract being relied upon. When pursuing outstanding sums, be aware that relevant contractual terms may also appear in other documents that have been incorporated into the contract. These may include the instructions to tender, the offer letter, a letter of award, the relevant bill of quantities, correspondence or minutes of meetings.
In the event that you are responding to an unproven claim, again it will be important to set out the terms relied upon in your defense. These include the relevant specifications that detail the work concerned, programmes confirming the relevant time limits, any “pay when paid” provisions, notice obligations that are “condition precedent” to bringing a claim and any provisions that confirm the information to be provided in substantiation of a claim.
Specify the sums claimed
It is important to set out all of the key aspects of the claim. This will include the details of the work undertaken, when it was applied for and when the sum should have been paid. If the responding party has previously given reasons for non-payment it is important that these are adequately dealt with. Disputed contra-charges must also be disproved by reference to factual documentation. Contractual issues must also be addressed. For example, you may need to establish that the relevant notices and supporting information were provided in accordance with the contract. You must also ensure that the outstanding sums are properly quantified and particularised.
Confirm remedy required
Ensure that you confirm the exact nature of the remedy required. This may be immediate payment in full. However, it could also include a request for agreed stage payments or the provision of post dated cheques. In the current climate it often pays to be creative when seeking to agree a way forward in relation to outstanding sums.
Anthony Page is an associate based in the Dubai office of HBJ Gateley Wareing Legal Consultants. He specialises in construction and engineering matters, in particular dispute resolution and claims involving delay and disruption, loss and expense, extensions of time, damages ascertainment, valuation of variations and defective works.
The opinions expressed in this column are of the author and not of the publisher.
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