INTRODUCTION
Construction Adjudication is governed by the Construction Industry Payment and Adjudication Act 2012 (Act 746) (‘CIPAA 2012’) and Construction Industry Payment and Adjudication Regulations 2014 (PU(A) 103/2014) (‘CIPA Regulation 2014’). This article provides for the summary process of the payment dispute resolution for construction contracts, which aims to maintain the cash flow in the construction industry in Malaysia.
The discussion of construction adjudication process will be divided into the following topics and delivered in the course of the following weeks: –
- Application and scope of CIPAA 2012
- Payment Claim & Payment Response
- Commencement of construction adjudication
- Appointment of Adjudicator
- Construction Adjudication
- Enforcing the Adjudication Decision
APPLICATION AND SCOPE OF CIPAA 2012
Section 2 of the CIPAA 2012 states that the Act applies to every ‘construction contract’: –
- made in writing;
- relating to construction work (defined in Section 4 of the CIPAA 2012); and
- carried out wholly or partly within the territory of Malaysia including a construction contract entered into by the Government.
Section 4 of the CIPAA 2012 states that “construction contract” means a construction work contract or construction consultancy contract.
Section 3 of the CIPAA 2012 excludes the application of the Act to a construction contract entered into by a natural person for any construction work in respect of any building which is less than four storeys high and which is wholly intended for his occupation.
Section 40 of the CIPAA 2012 also states that the Minister may exempt the following from all or any of the provisions of this Act, subject to such terms and conditions as may be prescribed: –
- any person or class of persons; or
- any contract, matter or transaction or any class thereof.
In the Federal Court case of Ireka Engineering & construction Sdn Bhd v. PWC Corporation Sdn Bhd & Other Appeals [2019] 6 MLRA 1 where the Federal Court stated that “the statute should not be interpreted retrospectively”.
As such, the CIPAA 2012 only applies to construction contracts made on or after the operation date of CIPAA 2012, i.e. April 2014.