An Act mainly to promote Québec-sourced and responsible procurement by public bodies, to reinforce the integrity regime of enterprises and to increase the powers of the Autorité des marchés publics (SQ 2022, c 18)was passed by the National Assembly of Québec on May 25 and assented to on June 2, 2022. In part, this Act amended the Act respecting contracting by public bodies, CQLR c C-65.1 (the ACPB) to deal with requests for payment by contractors supplying goods and providing services to public construction works. The amendments also provide for a dispute resolution process in respect of public construction works, whereby disputes between owners, contractors and/or subcontractors can be referred to third parties designated by the Québec Government.

The amendments are made as a continued effort to alleviate perceived payment delays down the construction pyramid, and to establish a voluntary third-party dispute resolution mechanism in case of payment disagreements. Between 2018 and 2021, a pilot project to test a solution to the problem of payment delays in the construction industry in Québec was put in place, and the solutions were tested on 52 public construction contracts. Deemed successful, part of the project now constitutes the first and current iteration of the prompt payment regime, and is set out in the regulation Pilot project to facilitate payment to enterprises that are parties to public construction work contracts and related public subcontracts adopted under the ACPB (CQLR C‑65.1, r 8.01) (the Regulation). Such prompt payment regime is currently applicable to an additional 180 public construction projects, as identified in Schedule 1 of the Act respecting the acceleration of certain infrastructure projects (CQLR c A-2.001). The ACPB aims to broaden the application of the regime to all public construction contracts.

Specifically, sections 21.48.19 to 21.48.32 of the ACPB are designed to “ensure prompt payment of sums of money claimed by enterprises that take part in carrying out construction work on behalf of public bodies” and “allow prompt settlement of disputes” (s. 21.48.19). These amendments provide a foundation for prompt payment legislation which may, ultimately, be similar to that in force in other parts of the country:¹

• The phrase “valid request for payment” made by a contractor or subcontractor is defined (s. 21.48.21);
• Once a valid request for payment has been made, the alleged debtor must expressly refuse (within a time to be fixed by regulation) to pay and must provide grounds for non-payment (s. 21.48.23), failing which the debtor will be considered in default and obliged to honour the valid request for payment, even if s/he has not yet been paid (s. 21.48.24);
• A sum of money for which a debtor is in default of payment bears interest at the rate determined by government regulation (s. 21.48.25); and
• Certain types of construction disputes identified by regulation may be decided by a government-sanctioned third-party decision maker (ss. 21.48.26 and 21.48.29), whose decision shall be binding and must be followed by the parties “until…a judgment by a court of general jurisdiction is made or an arbitration award is rendered on the same subject matter” (ss. 21.48.27 and 21.48.28).

As may be gleaned from the summary above, much of the prompt payment scheme and dispute resolution machinery remains to be clarified by regulation. However, given that the purpose of the legislative amendments is to give permanent effect to some of the solutions provided by the 2018 prompt payment pilot project,² it is anticipated that some or all of the following features of that project may be included in the regulations:

• A timeline setting out mandatory payment dates for the general contractor and all subcontractors in the construction chain, which are triggered by fixed dates for serving valid requests for payment. Under the Regulation, such timeline is set to the first of the month for general contractors to serve owners, and the 25th of the month for subcontractors to serve the contractor above them in the chain;
• The designation of persons, bodies or associations responsible for certifying the persons who may act as third-person deciders. The Regulation currently provides for the third-party decision makers for the dispute resolution process to be drawn from l’Institut de médiation et d’arbitrage du Québec (IMAQ), and IMAQ appoints the adjudicator if the parties cannot agree on one;
• Potentially mandatory negotiation between the parties prior to gaining access to the third-party decision maker. No such mandatory negotiation between the parties is required under the Regulation;
• A fast-track dispute resolution process. From the moment the adjudicator is retained until the rendering of its decision, the Regulation provides for the dispute resolution process to take a maximum of 55 days;
• Regardless of the decision rendered by the third-party decision maker, the parties to the dispute could have the right to re-arbitrate it or re-litigate it, in court. Under the Regulation, a proceeding pertaining to the same elements as those involved in adjudication under the dispute resolution process may, subsequent to the adjudicator’s decision, be brought by one of the parties to the contract before an arbitrator or a court of general jurisdiction; and
• Construction delay claims, claims for loss of productivity and other indirect claims may be excluded from the statutory dispute resolution process. Under the current regime, these are not expressly excluded.³

Dentons will continue to monitor developments related to prompt payment in the Québec construction industry. For questions on these matters, please feel free to contact Pierre Grenier and Audréanne Poulin or any other member of the Dentons Canada Construction and Infrastructure Group.

1. See generally Gouvernement du Québec, “Mémoire au Conseil des Ministres: Amendements au projet de loi no 12, Loi visant principalement à promouvoir l’achat québécois et responsable par les organismes publics, à renforcer le régime d’intégrité des entreprises et à accroître les pouvoirs de l’Autorité des marchés publics” (April 11, 2022).
2. Gouvernement du Québec, “Mémoire au Conseil des Ministres: Amendements au projet de loi no 12, Loi visant principalement à promouvoir l’achat québécois et responsable par les organismes publics, à renforcer le régime d’intégrité des entreprises et à accroître les pouvoirs de l’Autorité des marchés publics” (April 11, 2022).
3. Gouvernement du Québec, “Rapport sur la Mise en Oeuvre d’un Projet Pilote sur les Délais de Paiement dans l’Industrie de la Construction” (March 2022).