Bill proposed to improve delays in payments

Stacy Shi

The Development Bureau yesterday proposed a bill aimed at addressing the issue of delayed payments among contracting parties.

The Construction Industry Security of Payment Bill introduces a mechanism to improve the current situation where payment disputes are typically resolved only at the conclusion of a contract.

Under the proposed bill, unfair payment terms such as "pay when paid" will be prohibited. The paying party will be required to respond to payment claims within 30 days and make a full payment within 60 days. This ensures that payments are made in a timely manner.

One notable change introduced by the bill is the establishment of an adjudication proceeding for resolving payment disputes. If the paying party fails to respond or pay within the specified time period, the unpaid party can initiate an adjudication proceeding. An independent adjudicator will be appointed to make a determination within 55 working days. If either party is dissatisfied with the determination, they have the option to refer the dispute to litigation or arbitration.

Also, the bill allows the claimant to suspend or slow down the progress of work if the paying party fails to make payment after recognizing the amount due.

The bill is set to be gazetted today May 17 and will be introduced into the Legco for the first reading on May 29. The Development Bureau hopes that the bill will pass later this year and come into effect next year.