With the coming into force of the Construction Industry Payment Adjudication Act 2012 (in short, “CIPAA”), the Malaysian construction industry has seen a flourish of adjudication claims for payment. Having qualified as a licensed adjudicator and admitted to be on the panel of adjudicators by the Kuala Lumpur Regional Centre for Arbitration (KLRCA), we are thus equipped and ready to commence or defend adjudication claims.

What is adjudication?

• To a layman, it is a “pay first, argue later” procedure to resolving disputes in the construction industry.
• Is designed to protect cash-flow of contractor in a construction project.
• Is a fast track process taking approximately 120 working days

When is CIPAA applicable?

• To every construction contract made in writing relating to construction work carried out wholly or partly within Malaysia.
• Does not apply to construction contract enter into by individuals for any construction work if any building less than 4 storey and which is wholly intended for his occupation.
• CIPAA has come into operation in 15.4.2014 and is applicable retrospectively. i.e. applicable to contracts entered into prior to 15.4.2014.

What is adjudication suitable for?

• Adjudication is suitable for contractor or consultants who has a claim relating to payment outstanding for works carried out or services rendered.

What should I do to start adjudication?

• Before starting an adjudication, the claimant (i.e. the unpaid party) should give a payment claim to the party owing him (i.e. the respondent) the payment outlining the details of his claim.
• Upon receipt of the payment claim, the respondent must, within 10 working days, give a written response stating any defence for non-payment.
• The claimant then serve on the respondent a notice of adjudication and notify KLRC to register adjudication.

Can I contract out of or exclude CIPAA?

• Parties to construction contract cannot exclude the operation of CIPAA.

What other legislation or rules or circulars should I be aware of which is related to CIPAA?

• Construction Industry Payment & Adjudication Rules Procedure (revised as at 14.5.2014)
• KLRCA Adjudication Rules & Procedures (revised at 14.5.2014)
• KLRCA circulars 01 Issued on 23.4.2014
• KLRCA Circular 02 on KLRCA recommended schedule of fees (amended as at 1.8.2014)
• KLRCA Circular 03 on guideline on meaning of construction contract made in writing