The Malaysian Bar's International Malaysia Law Conference ("IMLC") 2018 is taking place from 14 to 17 Aug 2018 at The Royale Chulan Kuala Lumpur.
by Dawn Wong Keng Jade
Construction disputes abound, particularly those pertaining to non–payment. The solution? The Construction Industry Payment and Adjudication Act 2012 (“CIPAA”). Intended to redress the problems of non–payment faced by the construction industry, which had a knock–on effect on the completion of projects, this session was intended to provide an overview of the effects and workings of the CIPAA.
With his usual candour, Ir Harbans Singh K S pointed out the harsh realities of the adjudication process and addressed the failings of CIPAA. Adjudication was heralded with much fanfare, but was perhaps oversold. The mantra is “pay first, argue later”, and the regime ideally intended to expedite cash flow by providing remedies for the recovery of payment, to alter existing payment cultures, and to improve contract administration. However, a lack of appreciation for the workings of adjudication has rendered the process into a form of fast–track arbitration. Adjudication is a byword for rough justice and as such, there is no place for the fastidious application of procedural niceties to what is essentially a summary procedure. This has triggered a growing disillusionment with adjudication. The aim, says Ir Harbans, must be to revert to the initial objectives of Parliament.
Rohan Arasoo Jeyabalah continued the discourse by comprehensively analysing significant decisions by the Malaysian Courts on the application of CIPAA, including the Federal Court’s decision in View Esteem Sdn Bhd v Bina Puri Holdings Bhd  8 AMR 167. In View Esteem, it was held, inter alia, that a jurisdictional challenge as to the application of CIPAA could be raised at any stage of the adjudication proceedings, and that a party was not precluded from raising defences in its Adjudication Response which had not been previously raised in its Payment Response. Rohan also discussed the Court of Appeal’s decision in Bauer (M) Sdn Bhd v Jack–In Pile (M) Sdn Bhd  MLJU 401, where the Court of Appeal departed from its decision in UDA Holdings by holding that CIPAA applies prospectively instead of retrospectively on the basis that where a law affects substantive rights, the law looks forward, not back. It now remains to be seen whether the Federal Court, when deliberating the matter, will accept the majority view or the dissenting view of the Court of Appeal. In summary, it appears that adjudication decisions are now subject to closer judicial scrutiny, and the legal pendulum once previously in favour of the claimant, has swung.
Belden Premaraj emphasised that about 54.35% of adjudication decisions are being reventilated by way of litigation or arbitration. Clearly, adjudication has faltered in that it is now being treated as a two–tier dispute resolution process, to the benefit of only the third–party service provider. Adjudication it appears, works very much in favour of the claimant (recent figures point to an 88% success rate). Aggrieved contractors are therefore encouraged and indeed emboldened to commence claims against recalcitrant employers, even for very complex disputes. Whether this will result in a paradigm shift from recalcitrant employers to claims–driven contractors, only time will tell.
The session was moderated by Ilia Putilin, from the Asian International Arbitration Centre.
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