A major change for the construction industry in Quebec

More specifically, this mechanism provides for the following stages and deadlines:

In the case of a contract between a general contractor and a public body, the request for intervention must be notified to the other contracting party no later than 90 days after the date on which the work was accepted without reservation, or, if accepted with reservation, the date on which the public body declares that it is satisfied with the repairs or corrections made to the work. In the case of a subcontract, the request for intervention must be notified no later than 90 days from the date the work the parties agreed on is completed.

The Regulation also provides for the following:

• One dispute, one request for intervention – Although a request for intervention can relate to one dispute alone, a party cannot dissociate the constituting elements of the dispute in order to file multiple requests or otherwise act to abuse the right to have recourse to a third-person decider.
  
   
• Choice of third-person decider – Only persons whose names appear in the register kept by the Minister of Justice under the Regulation may act as third-person deciders. It is up to the party proposing a third-person decider to ensure that the person is available. In the event of disagreement, the parties draw lots.
  
   
• Procedure – As long as they ensure that the procedure is equitable and complies with the principle of proportionality, the third-person decider can conduct the intervention according to the procedure they determine. Also, unless the third-person decider decides otherwise, the proceedings are conducted orally, whereas testimony is given by way of a written affidavit.
  
   
• No lawyers – Parties cannot be represented by a lawyer during proceedings, although a lawyer may advise them.
  
   
• Confidentiality – The entire intervention remains confidential, subject to agreement between the parties or legal obligations.
  
   
• Third-person decider’s fees – As a general rule, the third-person decider’s fees are allocated equally between the parties (50-50), although the third-person decider may depart from this allocation if they consider that a party’s actions during the intervention were harmful, in particular because of abusive conduct or failure to meet deadlines. The third-person decider’s fees are capped according to the value of the dispute.

Conclusion

This new compulsory scheme now imposes, for cases covered, a prompt payment process and speeds up the settlement of disputes arising during the performance of the majority of public construction contracts. It will have major repercussions on the practices of contractors, subcontractors and public bodies alike. The imposition of the strict deadlines by the Regulation could require contractors and subcontractors to improve their internal processes to better process payment requests and properly document potential claims.

Although the Regulation is intended to simplify and accelerate payments, some contractors and subcontractors may find it difficult to meet the imposed deadlines, especially in large-scale projects involving many stakeholders, as delays are likely to be passed on from one level of subcontractor to another.

Whether this system will be successful will depend on the ability of the parties to quickly adapt to the new requirements and to make effective use of the third-person decider to resolve disputes.

If you have any questions or need advice, we invite you to contact a member of our specialized construction law team at Lavery.