Two MPs, Michalis Paraskeva and Odysseas Michaelides, have tabled a bill to speed up the resolution of disputes in construction contracts. It would allow decisions to be enforced through the courts while remaining temporarily binding on the parties.
The proposal covers disputes over payments, delays, extensions of time, additional work and technical issues. Its aim is to prevent disagreements from dragging on, adding costs and holding up projects.
The proposed framework would apply to private and public construction contracts where the parties have agreed in writing to use the procedure. It would establish rules for appointing an independent adjudicator, issuing a decision and seeking court recognition and enforcement.
What is construction adjudication?
Under the proposed process, the parties refer a specific dispute to an independent and impartial adjudicator, who issues a written decision. That decision would bind the parties temporarily, even if one of them disagrees with the outcome.
Unlike arbitration, adjudication is not necessarily intended to settle a dispute for good. It is designed to provide a prompt answer to issues arising while construction work is under way, helping limit disruption to the project.
The parties would be free to decide whether to use adjudication. Their written agreement could form part of the original contract or be made later. It could cover all disputes, certain types of dispute or a disagreement that has already arisen.
If the agreed conditions are met, either party could refer a dispute to the adjudication body without seeking fresh consent from the other side.
Decisions would be binding while a dispute continues
The bill would require parties to comply with an adjudicator’s decision without delay. A challenge, court case or arbitration would not automatically suspend that obligation.
Decisions could cover money owed as well as other contractual requirements. They might address whether work should be accepted, require work to be corrected, repeated or removed, or deal temporarily with extensions of time, variations, valuations and certificates.
The decisions would apply only to the parties to the contract. They could not replace any licence, approval or certificate required by law.
Courts would not reconsider the merits
If a party failed to comply, the other could apply to the relevant District Court or Commercial Court for recognition or enforcement. The proposed process would be expedited, and the court would not rehear the underlying dispute or reassess the adjudicator’s interpretation of the contract or technical evidence.
The bill sets limited grounds on which a court could refuse recognition. These include the absence of a valid written agreement, a serious breach of a party’s right to be heard, concerns about the adjudicator’s independence or impartiality, fraud, corruption or forgery, and a clear conflict with public policy.
Disagreement with the decision, a challenge to the amount awarded or another ongoing proceeding would not, by themselves, be grounds for refusal.
A court could suspend enforcement in exceptional circumstances, such as a serious risk of harm that could not be adequately remedied later. For monetary decisions, that could include a substantial risk that money could not be repaid. For non-monetary decisions, it might involve irreversible changes to the project or serious health and safety concerns.
The court could also impose measures such as a bank guarantee, payment into a controlled account or compliance in stages instead of suspending enforcement altogether.
Public contracts and the right to a final ruling
The proposed law would also cover public construction contracts where a valid adjudication agreement is in place. Public authorities would not have to include such an agreement. But where they did, their status as public bodies would not automatically give them a right to suspend enforcement or different treatment in court.
The bill would preserve the parties’ right to seek a final resolution through court, arbitration or another agreed process. That final decision could change or overturn the adjudication decision. If a party had paid money that was later found not to be due, the proposal would allow for repayment or another remedy.
The new framework would not automatically apply to existing contracts. The parties could agree in writing to bring future or existing disputes under it.
If Parliament approves the bill, the law would take effect six months after publication in the Official Gazette. The Supreme Court could issue procedural rules for applications for recognition, enforcement and suspension. Until then, existing civil procedure rules would apply with any necessary adjustments.
The bill aims to improve legal certainty and provide a faster, more predictable route for resolving construction disputes in Cyprus. It has been tabled in Parliament and is not yet law.
The draft law
An English translation of the draft law and its explanatory memorandum may be viewed by clicking here.
The draft law and its explanatory memorandum in Greek may be viewed by clicking here
