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Building and Construction Industry Security of Payment Act

Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)

The Building and Construction Industry Security of Payments Act (Cap 30B, 2006 Rev Ed) (“SOPA”) seeks to improve cash flow in the construction industry. It does so by creating a specialised adjudication regime, whereby parties have the right to seek progress payments for work done within specified time limits.

Where parties contest the sums to be paid, they can opt for adjudication, which is an alternative dispute resolution mechanism aimed to be cost-effective and quick. Under the SOPA, the adjudication operates under strict timelines and the adjudicator(s) may only consider limited material put before them during those timelines. The courts have recognised that this is an abbreviated process of dispute resolution, which although somewhat roughshod, is compensated for by the fact that the adjudication determination is only of temporary finality. Temporary finality means that after the adjudication determination, the losing respondent may challenge the adjudication determination in court, although only on certain grounds and only after the adjudicated sum is paid into court first. This facilitates cash-flow in the construction industry.

The SOPA deals with, inter alia:

(a) The right to progress payments (Part II);

(b) Payment claims and responses (Part III);

(c) Adjudication of payment claim disputes (Part IV);

(d) Measures to enforce payment of the adjudicated amount (Part V); and

(e) Other general provisions relating to adjudication.

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