Prompt Payments and Settlement of Dispute in Construction: A New Framework You Need to Know About

Scope of Application and Gradual Implementation of the Regulation respecting prompt payments and the prompt settlement of disputes with regard to construction work 

The regulation applies to construction contracts entered into with public bodies, covering both contractors and subcontractors. It is being implemented gradually based on contract value: 

• As of September 8, 2025, the regulation applies to building contracts exceeding $750,000 and civil engineering work contracts exceeding $2,500,000, covered by a call for tenders issued on or after that date. 
• As of September 8, 2026, it will extend to building contracts valued between $75,000 and $750,000 and civil engineering work contracts valued between $675,000 and $2,500,000. 
• As of September 8, 2027, all construction contracts covered by the regulation will be subject to it, regardless of their value. 

The regulation creates two distinct processes: a fast-track payment process and a fast-track dispute settlement process. 

However, only direct costs are covered by the regulation: it does not apply to monetary claims seeking compensation for lost profits, lost productivity, or lost business opportunities resulting from a change in the scope of work or in the terms of performance of a public contract or subcontract. Claims of this nature remain subject to the usual contractual and legal remedies. Public construction contracts entered into under emergency circumstances are also excluded. 

The Prompt Payment System: A Tight Timeline 

The process is initiated by the submission of a payment request. Subcontractors must submit their requests to the general contractor no later than the 25th day of the month, and the latter must respond to the subcontractor’s request no later than the last day of said month.  

The general contractor then submits their own request to the public body on the 1st day of the following month, and the public body must decide on the request no later than the 21st day of that month. 

Important rule: Payment requests are deemed accepted unless they are rejected within the specified timeframes. In other words, silence implies acceptance. 

Furthermore, unless otherwise agreed, public bodies are responsible for setting the value of a contractual change so that undisputed amounts can be paid promptly. In other words, a payment request may cover additional work arising from a modification to the contract’s initial scope or its terms of performance. Even if the applicable price for this change has not yet been agreed upon submission of the request, the public body may not refuse payment for that reason alone: it must assess and determine the price, and its right to refuse payment is limited to the portion of the claim that exceeds the amount it has itself established. 

Cascading Payments 

Payments occur through a cascading payment mechanism: the public body pays no later than the last day of the month; the contractor pays their subcontractors on the 5th day of the second month following receipt of their request; the subcontractor, in turn, pays on the 10th day of the second month, and each lower level has an additional five days. 

The entire cycle takes place over a period of approximately 30 days. As an example, for work completed in June 2026: 

Expedited Dispute Resolution: A 50-Day Process 

The second component of the regulation allows parties to seek the intervention of an accredited adjudicator. 

The process is initiated by submitting a request for intervention within 90 days of the public body’s acceptance of the work without reservation (or, if acceptance is with reservations, within 90 days of the date on which the public body is satisfied with the corrections). The process covers a wide range of issues: validity of a payment request; the validity of a refusal, deduction, or holdback; existence or value of a change in the scope of work; whether a sum of money is payable; and any other issue regarding the application or interpretation of the contract. 

The entire process takes approximately 50 days and involves seven steps: 

• request for intervention; 
• response from the other party; 
• appointment of a third-party decision-maker; 
• detailed statement by the claimant; 
• detailed statement by the other party; 
• decision; 
• payment, if applicable.  

The parties must have first attempted to resolve their dispute amicably.  

Noteworthy: The parties are not legally represented during this process, but they may (and indeed should) be assisted and advised by in-house or outside counsel.  

Finally, although the decision is binding, the parties nevertheless have the right to subsequently bring the same dispute before the ordinary courts or to arbitration. 

Need assistance? 

The Regulation respecting prompt payments and the prompt settlement of disputes with regard to construction work brings new obligations for all stakeholders in public construction contracts, which require, among other things, sound contract management practices and strict management of deadlines. Any questions? Our construction litigation team will be pleased to assist you. 

This article is part of our comprehensive public procurement law series, bringing together the insights of our professionals to help organizations navigate the evolving legal framework governing public contracts, anticipate legislative changes, and strengthen their public tendering strategies.