Jurisdiction - Australia
Australia – Possible Changes To Payment Dispute Resolution In Construction Contracts In Queensland.

5 February, 2013


Legal News & Analysis – Asia Pacific – Australia – Dispute Resolution


Outside of dispute resolution mechanisms provided for in individual contracts, payment disputes under construction contracts may also be resolved through the processes established in the Building and Construction Industry Payments Act 2004(BCIP Act). In response to issues raised energy and resources companies, the Queensland Government released a discussion paper in December 2012 to consider reforms of the BCIP Act. Some of the proposed reforms are detailed below.

The most relevant issue to the resources industry raised by the discussion paper is that of jurisdiction. The BCIP Act applies to all ‘construction work’, which is defined broadly enough to capture the subject matter of most works contracts in the resources sector, particularly in the construction and commissioning phase of projects. While there is an exclusion for the drilling for or extraction of gas and other minerals, this exclusion is narrow enough to exclude almost all works aside from mining processes.

The discussion paper raises the option of broadening this exclusion to bring the BCIP Act in line with the equivalent Western Australian legislation. The Western Australian legislation, as well as including the exceptions detailed above, also excludes the construction of any plant for the purposes of mining or extracting oil or gas. To do so would result in many of the construction contracts related to resource projects falling outside of the BCIP Act regime.

The discussion paper also raises whether it would be appropriate to limit the application of the BCIP Act to contracts under a specific value. This addresses a common complaint in the resources industry that contract values are too large, or that the subject matter is too complicated to be able to be dealt with sufficiently in the short statutory timeframes provided for both serving of a payment schedule (maximum 10 business days) and the decision of the adjudicator (maximum 10 business days).

Other issues raised in the discussion paper include whether payments for breach and delay costs should be included in the BCIP Act regime, and whether the procedural requirements (for example, the claim must state that the claim is made under the BCIP Act) is necessary or desirable.

Finally, consideration will need to be given as to whether, if any changes to the BCIP Act are eventually made, these changes should apply to construction contracts that are already on foot. This will require a balancing act between two competing interests – the frustration of companies that are locked into an unsuitable payment dispute scheme for contracts that, in the resource industry at least, can be relatively long term, and the fact that companies, and in particular contractors, have priced existing contracts with the current regime in place.

Submissions and comments are due by 22 February 2013.


For further information, please contact:


Jay Leary, Partner, Herbert Smith Freehills

[email protected]





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