When the Construction Contacts Act 2002 (the Act) came into force on 1 April 2003, it reformed the law relating to construction contracts and dramatically changed the face of dispute resolution in the construction industry in New Zealand.
The Act states that the objectives are to reform the law relating to construction contracts and, in particular to:
The reforms introduced statutory procedures for making and responding to payment claims and prohibited pay-if-paid and pay-when-paid clauses. This which ushered in a new payment morality for the construction industry, the introduction of a new statutory fast track adjudication regime for the resolution of construction disputes, and new remedies for the recovery of payments including the right to suspend work, enforcement of adjudication determinations by the courts, and charging orders over construction sites.
The Act generally applies to every construction contract entered into after 1 April 2003, whether or not governed by New Zealand law, and whether or not the construction contract is written, oral, or partly written and partly oral (s9).
No, it is not possible to contract out of the Act. The Act has effect despite any provision to the contrary in any agreement or contract (s12). For example, an agreement to mediate or arbitrate does not prevent a party referring a dispute to adjudication.
Section 12 was upheld as unambiguous in Willis Trust Co Ltd v Green (25.05.06, Harrison J, HC Auckland CIV 2006-404-809. The Court held that (in a judicial review application of the adjudicator’s determination) that the Act applied to the second respondent’s final claim despite the parties’ agreement to refer disputes to arbitration.
