Completing construction work does not always mean that payment follows on time.
A contractor may have completed the works, submitted its progress claim and waited for certification or payment — only to find that the amount remains unpaid, is substantially reduced, or is disputed altogether.
When that happens, the immediate question is often: what should we do next?
There is no single answer. The appropriate course depends on the contract, the nature of the payment dispute, the documents available and, importantly, the outcome the party is trying to achieve.
Start With the Contract
Before commencing any formal action, the construction contract should be the starting point.
The contract may prescribe how and when payment claims must be submitted, the certification process, the time for payment, requirements for notices and the mechanism for resolving disputes.
This matters because a payment dispute is not determined simply by whether work was physically carried out.
Questions may arise as to whether the work falls within the contractual scope, whether variations were properly instructed or approved, whether the amount claimed has been certified, whether there are defects or set-offs, or whether contractual procedures have been complied with.
Understanding these issues at an early stage helps determine both the strength of the claim and the appropriate next step.
Documents Matter
Construction disputes are often document-heavy.
Payment claims, payment certificates, variation orders, site instructions, progress reports, invoices, correspondence, meeting minutes and even WhatsApp messages may become important when establishing what work was carried out and what payment is due.
For that reason, parties facing a potential payment dispute should preserve their project records and communications.
A claim that appears straightforward commercially can become considerably more difficult if the supporting documentation is incomplete.
Is CIPAA an Option?
For certain payment disputes arising from construction contracts, statutory adjudication under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) may be an available option.
CIPAA was introduced to facilitate regular and timely payment in the construction industry and provides an adjudication mechanism through which qualifying payment disputes may be determined.
Adjudication can offer a comparatively swift route to a decision. However, the availability and suitability of CIPAA should be assessed against the particular contract and dispute.
Among other matters, consideration should be given to whether the contract and payment claim fall within the scope of CIPAA, how the payment dispute has crystallised, and whether the procedural requirements have been properly observed.
The fact that money is outstanding does not automatically mean that every dispute should proceed by way of adjudication.
What About Arbitration?
The contract may contain an arbitration agreement requiring disputes to be referred to arbitration rather than determined by the courts.
Arbitration is commonly found in construction and commercial contracts, particularly where parties prefer a private dispute resolution process or have agreed upon a particular arbitral framework.
Before commencing court proceedings, it is therefore important to check the dispute resolution clause.
Starting proceedings in the wrong forum can lead to unnecessary procedural disputes, additional costs and delay.
Court Proceedings May Still Be Appropriate
Depending on the contract and circumstances, court proceedings may be an appropriate route for recovering an outstanding sum or resolving the wider dispute between the parties.
The proceedings will depend on the nature and value of the claim, the issues in dispute and the relief sought.
In some cases, the dispute may extend beyond a single unpaid payment claim and involve questions of termination, damages, defects, variations, retention sums or competing claims between the parties.
The broader commercial picture therefore matters when deciding how the dispute should be pursued.
Choosing the Right Route
CIPAA, arbitration and court proceedings are not simply three interchangeable methods of recovering payment.
Each operates differently and may serve a different purpose.
Before deciding which route to take, it is useful to ask:
- What does the contract require?
- What exactly is being disputed?
- What documents support the claim?
- Has the relevant amount been certified?
- Are there allegations of defects, delay, set-off or counterclaims?
- Is there an arbitration clause?
- Is the payment dispute suitable for adjudication under CIPAA?
- What result does the claimant ultimately need?
Sometimes the objective is obtaining payment as quickly as reasonably possible. In other cases, the payment claim forms only one part of a much larger contractual dispute.
The strategy should reflect that distinction.
The First Step Is Not Always to Commence Proceedings
When payment is overdue, there can be understandable pressure to act immediately.
But effective dispute resolution begins before proceedings are filed.
Reviewing the contract, identifying the real issues, organising the project documents and considering the available dispute resolution mechanisms can help avoid taking a step that later complicates the claim.
Work may be completed and payment may be overdue — but the right route forward depends on the dispute.
Adrian, Syuhada, Sia & Associates (ASSA)
Litigation • Arbitration • Dispute Resolution
Commercial | Construction | Civil Disputes
Disclaimer: This article is intended for general information purposes only and does not constitute legal advice. The appropriate course of action will depend on the facts and circumstances of each matter.