Vous êtes sur la page 1sur 31

A to Z of Statutory Adjudication in

Malaysia
By Sr Dr Muhammad Ehsan Che Munaaim
PhD (King’s College, London), MSt (Cambridge), LLM (Glasgow), MSc (UTM) PGDipICArb (Queen Mary,
London), GDipLaw (UClan), BQS (Malaya), Certificate in Adjudication (KLRCA), FRICS, FCIArb, FCIOB,
MRISM, Chartered Quantity Surveyor(UK), Chartered Construction Manager(UK), Registered Quantity
Surveyor(Malaysia), Panel Adjudicator (KLRCA)

The Global Leader in Managing Construction Risk ™


A – Adjudication in its statutory form is a dispute resolution
mechanism - introduced by the Construction Industry Payment
and Adjudication Act 2012 (“CIPAA”) - by which an adjudicator
determines the rights and obligations of the parties under the
contract whose decision is binding and enforceable in the interim
until overturned by arbitration or the courts.

The Global Leader in Managing Construction Risk ™


B – By far the most popular method for resolution of construction
disputes in other jurisdictions that have introduced it – Malaysia
will be no exception!

The Global Leader in Managing Construction Risk ™


C – Construction contracts that are subject to the ambit of
adjudication are construction contracts made in writing for
construction work and for the supply of goods and professional
services carried out wholly or partly in Malaysia.

The Global Leader in Managing Construction Risk ™


D – Decisions made by adjudicators are dispensed within 45 days
from either the service of the adjudication response or reply (as
the case may be).

The Global Leader in Managing Construction Risk ™


E – Exempted contracts from the ambit of CIPAA are government
contracts for construction work that is carried out urgently and
without delay due to natural disaster, flood, landslide, ground
subsidence, fire and other emergency and unforeseen
circumstances; or relates to national security or security related
facilities, including the construction of military and police facilities,
military bases and camps, prison and detention camps, power
plants and water treatment plants.

The Global Leader in Managing Construction Risk ™


F – Four storeys and below building contracts entered into between
the owner and the contractor or consultant are also exempt from
CIPAA as long as the building is wholly intended for the owner’s
occupation.

The Global Leader in Managing Construction Risk ™


G – Government contracts less than RM 20 million were initially
partially exempt from CIPAA in the sense that the government
was afforded with a longer period for service of payment
responses, adjudication responses and adjudication replies than
the original time frames provided for under CIPAA – this
exemption was lifted on 1 January 2016 and these contracts are
no longer exempt from the time schedules under CIPAA.

The Global Leader in Managing Construction Risk ™


H – Helping contractors, subcontractor, consultants and suppliers with
their cash flow is the main aim of statutory adjudication provided
by CIPAA.

The Global Leader in Managing Construction Risk ™


I – Impartiality, inquisitorialness and immunity are the hallmarks of
the adjudication process.

The Global Leader in Managing Construction Risk ™


J – Justice in adjudication is served swiftly albeit in a rough manner
by ensuring vulnerable parties are not starved with cash flow
while construction is on-going.

The Global Leader in Managing Construction Risk ™


K – KLRCA is the sole adjudication nominating authority in respect of
the nomination of adjudicators although an adjudicator can also
be selected by agreement between the parties.

The Global Leader in Managing Construction Risk ™


L – Litigation may be commenced afresh after adjudication if one of
the parties is not satisfied with the adjudicator’s decision.

The Global Leader in Managing Construction Risk ™


M – Money claims that can be referred to adjudication are those
related to disputes that arise from partial or non-payment of a
payment application which in theory could include disputes on
prolongation, variation, disruption, liquidated damages, valuation
of final accounts and costs of defects as long as they arise under
the contract.

The Global Leader in Managing Construction Risk ™


N – No dispute means no reference to adjudication! - a dispute has to
be properly crystalized under the contract before it can be
referred to adjudication.

The Global Leader in Managing Construction Risk ™


O – Only final account disputes are arguably unfit for adjudication as
they are usually extensive and complex and may not be entirely
suited for resolution through a rigid scheme.

The Global Leader in Managing Construction Risk ™


P – Professional negligence disputes, disputes that may arise under a
consultancy agreement, are arguably not under the scope of
adjudication although the employer may use this as a defence
against a consultant to withhold payment.

The Global Leader in Managing Construction Risk ™


Q – Quantum determination of amounts rightfully due to parties is a
role that an adjudicator has to perform- given my quantity
surveying bias, quantity surveyors would thus be ideal
adjudicators!

The Global Leader in Managing Construction Risk ™


R – Remedies under CIPAA apart from invoking adjudication are
reducing the rate of work progress or suspending work or even
securing direct payment from the principal.

The Global Leader in Managing Construction Risk ™


S – Suspension or slowing down its progress of work entitles the
party who invokes such right to a fair and reasonable extension of
time and to recover any loss and expense incurred as a
consequence!

The Global Leader in Managing Construction Risk ™


T – The High Court or rather the Construction Court may enforce an
adjudication decision by ordering to enforce the adjudication
decision as if it is its judgment or order.

The Global Leader in Managing Construction Risk ™


U – UDA Holdings Bhd v Bisraya Construction Sdn Bhd was the first
case on adjudication where the Malaysian Court of Appeal had to
deal with the question whether CIPAA had retroactive application
– the answer was yes in the absence of an express provision to
the contrary in the contract!

The Global Leader in Managing Construction Risk ™


V – “Very Good” would be the rating the industry has given to
adjudication so far in respect of its swift and cost efficient
resolution of construction disputes in Malaysia!

The Global Leader in Managing Construction Risk ™


W – Warning! – despite this rating there are still areas for adjudication
to improve most notably in its process which takes slightly longer
than the other statutory adjudication schemes and its scope of
application which is slightly narrower than the other adjudication
regimes.

The Global Leader in Managing Construction Risk ™


X – Xtra consideration perhaps should be given in compiling
adjudication data and reporting adjudication statistics.

The Global Leader in Managing Construction Risk ™


Y – Year 2012 was the year CIPAA was given the Royal Assent and
on 15 April 2014 CIPAA came into force and the last 15 April 2016
marked its 2 years in operation.

The Global Leader in Managing Construction Risk ™


Z – Zero cash flow problems for contractors, suppliers and
consultants in Malaysia would be difficult to achieve – but with
statutory adjudication in place it would be a step towards that
direction!

The Global Leader in Managing Construction Risk ™


Dear Mr. Errant Paymaster,

I am writing this letter to let you know.


I am struggling with cash flow.
My money in the bank is running low.
This is because there is not enough inflow.

I am sure you know the last time you made payment.


You are leaving me with a big predicament.
I thought you said you’d honor your payment commitment.
Now you are causing me an unbearable torment.

I am sure you know what the solution is:


It is either pay up, or adjudication it is.
When the adjudicator arrives, you may not be at ease.
He will teach you a lesson that ignorance is not bliss.

The Global Leader in Managing Construction Risk ™


The adjudication process is pretty quick.
Decisions are made sooner than you’d think—
Hypothetically, as quick as your eyes blink.
It’s meant to ensure that payments are inked.

You may treat this letter as an intention to refer.


There is nothing you can do if you wish to defer.
If litigation or arbitration is something you prefer,
I can assure you one thing: more cost you’ll incur.

I am sure you know what adjudication entails.


It’s meant to harass bad paymasters with payees on their tails.
If a paymaster consistently fails,
It is a caning stick to ensure you pay without fail.

The Global Leader in Managing Construction Risk ™


I have said the things I wanted to say.
It’s now up to you to choose the game you want to play.
One thing I hope you’ll learn from what I say:
In this world, crime does not pay.

PS: Not paying is a crime – like stealing.

Yours faithfully,

Mr. Hopeful Payee

The Global Leader in Managing Construction Risk ™


Thank You!
Any Questions?

Muhammad Ehsan Che Munaaim


Senior Consultant
Hill International (Middle East)
1406, 14th Floor Marina Plaza
PO Box 31450
Dubai UAE
Tel: +971 4 337 2145
Fax:+971 4 335 6077
Mobile: +971 56 7290281
MuhammadEhsanCheMunaaim@hillintl.com
www.hillintl.com
https://www.linkedin.com/in/muhammadehsanmunaaim

The Global Leader in Managing Construction Risk ™

Vous aimerez peut-être aussi