Starting in six months, Hong Kong will introduce a new legislative measure aimed at expediting the resolution of payment disputes within the construction sector. This initiative is expected to significantly reduce the time required to settle such issues from years to just 55 working days. Legal experts predict an increased demand for adjudicators, possibly necessitating the inclusion of international professionals due to potential shortages. The city's construction industry faces challenges including economic headwinds and a slowdown in growth, but this reform aims to streamline processes and improve efficiency. Contractors and subcontractors will now have the right to seek adjudication on a monthly basis, marking a substantial shift from the previous system where disputes could only be addressed post-project completion.

The upcoming legislation represents a pivotal change for Hong Kong's construction sector. Previously, resolving payment-related disputes was a lengthy process that often extended for several years. However, with the new law, these matters will be handled much more swiftly. Donovan Ferguson, a legal expert, highlighted that the intensive nature of the adjudication process, which requires delivering decisions within 55 working days, may pose challenges for finding qualified personnel. He noted that many potential adjudicators might be deterred by conflicts of interest or availability issues. To address this, Ferguson suggested that the government might need to broaden eligibility criteria, potentially allowing foreign professionals to participate.

Stanley Lo, another legal professional, emphasized the importance of preparing for the implementation of this new framework. With the ordinance set to take effect in August, he urged relevant bodies to ensure that there are enough trained and registered adjudicators ready to handle cases. Currently, only four organizations in Hong Kong are authorized to nominate adjudicators, and they must meet the deadline of August 28th. Lo also pointed out the need for a training program and awareness campaign to encourage more professionals to become adjudicators. As the number of eligible contracts gradually increases over the coming years, more adjudicators will be needed to manage the growing caseload.

The new law will allow contractors and subcontractors to dispute payment amounts on a monthly basis, rather than waiting until the project's completion. This change is expected to lead to a surge in adjudication claims within six months of the ordinance's implementation. Ferguson anticipates that main contractors will face the highest volume of payment claims and stressed the importance of proper record-keeping. Additionally, Lo advised parties to review their contracts to ensure compliance with the new regulations. The elimination of "pay when paid" clauses means that prime contractors must pay subcontractors regardless of whether they have received payment from the project owner. Both stakeholders and project owners should prepare by upgrading document management systems and establishing efficient payment schedules.

This legislative reform aligns Hong Kong with other jurisdictions like Australia, England, New Zealand, Singapore, and Malaysia, which already have similar security of payment laws. By adopting this framework, Hong Kong aims to enhance its construction industry's operational efficiency and competitiveness. While challenges lie ahead, particularly in ensuring an adequate supply of qualified adjudicators, the new system promises to bring about significant improvements in resolving payment disputes promptly and effectively.