Briefing to Adjudicators – Impact of Part 8 of the COVID-19 (Temporary Measures) Act on the Security of Payment Act

Overview

Part 8 of the COVID-19 (Temporary Measures) Act (the “COVID-19 Act”) was enacted by Parliament on 5 June 2020, and further modified on 4 September 2020. It was introduced with the intent to provide relief for individuals or businesses, whose contracts have been affected by the disruption to the construction sector, that is due to COVID-19.

One category of contracts that the Ministry of Law intends to prescribe under section 36 of the COVID-19 Act is a contract for the rental of goods that are used for construction works. As such contracts can also be supply contracts under the Building and Construction Industry Security of Payment Act (“SOPA”), the COVID-19 Act provides for the following interaction between the framework for relief under Part 8, and the SOPA adjudication framework:

a. Where there is no existing or previous SOPA adjudication application in respect of the matter, a party may apply for relief under Part 8 of the COVID-19 Act. An assessor that is appointed under the COVID-19 Act may then adjust specified terms of the contract in order to achieve a just and equitable outcome for parties: see section 38 of the Act. There will also be a moratorium on the commencement or continuation of SOPA adjudication (as well as other dispute resolution proceedings such as court and arbitral proceedings) which subsists until the Part 8 process is complete.

After the terms of the contract have been adjusted under the Part 8 framework, it is still possible for a SOPA adjudication application to be made. In such case, the COVID-19 Act provides that the SOPA adjudicator must consider only the contract, as adjusted by under the Part 8 (COVID-19) framework : see section 38B of the Act, which sets out the effect of a Part 8 determination on a subsequent SOPA adjudication.

b. Where an adjudication application has already been made under section 13(1) of SOPA, then the SOPA respondent may not apply for relief under Part 8 of the COVID-19 Act. Instead, any possible relief for the SOPA respondent will be addressed via the SOPA adjudication process: see sections 37(1A)(c) read with 38C of the Act.

The Ministry of Law, together with the Building and Construction Authority has offered to conduct a briefing to explain the framework for relief in more detail.

We encourage all adjudicators to attend this important briefing. Upon successful registration, log-in details will be emailed to you on Friday, 18 September 2020.

For inquiries or for further assistance, please do not hesitate to contact the Business Development Team by email at [email protected] or [email protected].