Alex White (Labour)

The Minister of State referred to practising politicians' experience of discussing with subcontractors their difficulties and real dilemmas. We are all very keenly aware of these. We would have to be on another planet not to be aware of the very genuine and serious problems people face. I refer, for example, to people who have abandoned their employment and whatever protections they had as employees to enter business in their own right. They find they are in dreadfully serious circumstances in terms of their not having been paid, not having any protection for themselves, perhaps not having any pension provision and having little or no access to welfare protection. They are caught between many different stools and are in dreadful circumstances. There are very many people in that position. For this reason alone, it is important and useful that Senator Quinn has raised this issue in the Seanad. He has brought forward a practical proposal to address it and I commend him very much on his having done so.

This problem is not confined to the construction industry and it is important we remind ourselves of this. In commercial life generally, there are great difficulties encountered by people who are simply trying to be paid for the work they have done. I am prepared to accept the construction industry has a peculiar configuration in terms of head contractors and subcontractors but it is not entirely peculiar.

There are many areas of commercial life that involve subcontracting, be it from a printer to a printer, from a printer to a graphic designer, or from a graphic designer to another operator. If something goes wrong and it affects the head contractors, the subcontractors encounter difficulty. We must be aware that the difficulty is not nearly confined to the construction industry. I do not make this point to undermine in any sense what Senator Quinn is saying but to highlight that we need a broader perspective on this undoubtedly terribly serious problem.

It occurred to me while listening to Senator Quinn and some of my colleagues that, two years ago, people would have been appalled at the prospect of the Oireachtas being asked to intervene in what is essentially a contractual nexus, an area of agreement or disagreement between parties. The system we have tends to leave those issues, including issues concerning one's being paid or otherwise for doing work, to the parties and to favour little or no intervention on the part of the State. That has been the practice and history of the market. We are now engaged in a turnaround. There have been many turnarounds in our system. We are now saying we need State intervention in what was traditionally an issue to be resolved between the parties concerned through the contract, including where there is very serious conflict.

Section 7(2) states: "A party to a construction contract may not withhold any part of a payment after the relevant payment date of a sum due". A very familiar term of any contract is that a party may not withhold payment under that contract. If one agrees to do work and there is a payment set for it to be paid by a certain date if the work is completed, that is already a requirement. There is a mutual agreement between two parties. One side says it will do the work and the other says it will pay once the work is done. That is a familiar concept that does not require or should not require to be put into statute. This is not a criticism. We ought to take it for granted. Even as a legal proposition it is already in place.

Let me outline my central question on the Bill and the strategy proposed. While Senator MacSharry is correct that there is little in the Bill one could criticise, I am concerned it may be giving the impression it would be achieving something although ultimately it may not do so. That is the problem I have. There are not really robust sanctions at the heart of the Bill. This is one of the matters the Minister of State may wish to consider during the consultation he rightly suggests ought to occur.

There is a provision in the Bill on adjudication but there is no proposal to have compulsory adjudication, nor could there be because it would introduce problems of a constitutional nature. Can one compel people to enter into an adjudication process? Section 8 states a party to a construction contract has the right to refer for adjudication a dispute arising under the contract. While that is perfectly reasonable, what if the offending party does not wish to attend at the adjudication or participate in it? Subsection 8(3) states "The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings". There are very real constitutional doubts as to whether an adjudicator can make a legally binding decision in a case referred to him by one party when the other party does not turn up.

Some of the employment regulation orders that have been challenged in the courts in respect of a slightly different field, the electrical contract area, for example, raise a very similar question. Can one require parties to comply mandatorily with a particular regulation without their agreeing to do so? Is it constitutionally permissible to impose a decision on them when they have not entered freely into the adjudicative process? These are very complex issues pointed out by the Minister of State.

Senator Twomey pointed out one cannot legislate for trust. The idea behind a contract is that it is an idea between two parties. Both sides intend to bind each other and to carry out what is specified in the contract. The law of contract is quite well tested and old. We must not try to reinvent the wheel. Parties agree and if they break an agreement, they have recourse to the law.

With regard to recourse to the law, I agree very much with what Senators have said and with what Senator Quinn implied about the need for speedier and less costly resolution of disputes that arise in this area. The Senators are correct. With regard to the Bill's reference to promoting adjudication, I queried the extent to which adjudication can be made compulsory. That can be dealt with. Promoting alternative dispute resolution, arbitration and mediation mechanisms is a vital objective that I strongly support. I declare an interest in that I have acted as an arbitrator and mediator, including in commercial matters. From my experience as a barrister, I recognise how important and helpful it is to parties to have a resolution mechanism that is quick, accessible and cheap. If this Bill does nothing else, it certainly does us a service in terms of reminding us about and proposing a statutory form for dispute resolution, which I believe strongly ought to be promoted at every opportunity.

I reiterate that the Bill does not provide an ultimate sanction. Perhaps that is because those who drafted it were of the opinion that it was not possible to include such a sanction. If a party does not give notice of intention to withhold payment but, ultimately, does not pay, the Bill does not contain any mechanism which would act as a sanction in such circumstances. That is one of the reasons the Minister of State was correct in stating that there should be a period of reflection in respect of this proposal. Senator Quinn has done the House a service by raising this matter. That said, I do not believe the legislation is as of yet in a format whereby it could be allowed to proceed into law.