Proposed Security Of Payment Legislation (SOPL) Hong Kong

The Hong Kong SOPL for the construction industry is to help main contractors, sub-contractors, consultants and suppliers receive payments on time for work done and services provided. It also provides a means to rapidly resolve disputes. There have been many voices in the Hong Kong construction industry advocating the introduction of SOPL to improve payment practices and dispute resolution.

The Hong Kong SAR Government and the Construction Industry Council conducted a comprehensive and industry wide survey on payment practice in the local construction industry in 2011. The survey revealed that significant payment problems were being experienced by main contractors, sub-contractors, consultants and suppliers. Particular problems included the use of ‘pay when paid’ clauses and payments being delayed by disputes. Payment problems were more severe in the private sector. Administrative and contractual arrangements on public works contracts alone cannot help resolve the problems of the wider industry. The Hong Kong SAR Government therefore considers it necessary to adopt a legislative approach to address payment problems.

The Hong Kong SOPL is modelled with reference to other jurisdictions which have similar industry practices to Hong Kong where security of payment legislations have been put in place, in recognition of the vulnerability of the construction industry (and especially the smaller sub-contractors, consultants and suppliers) to disputes and payment delays. The countries which have already enacted SOPL are the United Kingdom, Australia (in 6 different states and 2 territories), New Zealand, Singapore, Malaysia and Ireland.

The proposed model for the Hong Kong SOPL as published by the Development Bureau Consultation Document June 2015 is as follows:

The full SOPL Consultation Document of June 2015 can be downloaded here

Armed with the practice experience gained from both managing and adjudicating security of payment adjudications in Singapore and Malaysia, we have been actively playing our part in sharing our knowledge through talks and seminars in Hong Kong, organised by professional institutions and trade organisations, highlighting the common pitfalls and identifying possible solutions to both employers and contractors in navigating the provisions of the SOPL.

CPD Seminar conducted by CSi with the Hong Kong Institute of Surveyors (HKIS)