09 September 2022
In construction disputes, time is of the essence. Stable and clear legal frameworks are essential for complex construction projects to be undertaken smoothly, and for any disputes that arise to be properly and timeously resolved, in order to minimise their impact on the overall completion of the construction works involved.
One crucial aspect of any construction dispute is when, under what conditions, and how, payments before project completion will be due and made. Following industry concerns about payment problems experienced by contractors, the Development Bureau of the HKSAR Government explored creating the Security of Payment (“SOP”) scheme to clarify the legal framework involved in resolving these key questions.
The objective of the SOP scheme is to enhance the cash flow of contractors whilst resolving any disputes that arise by providing a simple process for claiming payments, responding to claims, and resolving payment disputes by adjudication when a construction project is ongoing.
This is first of two consecutive articles which will highlight the overall framework and important implications of the SOP scheme in Hong Kong. In this first introductory article, the authors aim to explain the overall structure of the adjudication process envisaged under the contractual SOP scheme.
To read the full text, please download Newsletter: Decoding Hong Kong’s Unique Construction Payments Adjudication Scheme.
This Article was co-authored by Calvin Cheuk, Kaiser Leung, and Joshua Yeung.