The Honourable YA Dato’ Lee Swee Seng, Judge of the Court of Appeal,
The Honourable YA Dato' Lim Chong Fong,
The Honourable YA Dato' Hajah Aliza binti Sulaiman,
Distinguished speakers and guests,
Members of the Bar,
Ladies and Gentlemen,
Assalamualaikum and a very good morning.
1. It is a great honour to have been invited to deliver a welcome speech on the occasion of the "Public Forum: Reforms to the Construction Industry Payment and Adjudication Act 2012 ('CIPAA')", a joint initiative by the AIAC and the Bar Council Construction Law Committee (BCCCL).
2. The area of construction law has always been an area of interest for the Bar. The construction industry, which is dispute-prone, is an important segment of the economy. To address construction law issues, the BCCCL was first formed as the Sub-Committee on Construction Law back in the year of 2007. Coincidentally, YA Dato’ Lim Chong Fong was our then chairperson. To reduce the backlog of construction cases filed in the High Court, the Sub-Committee on Construction Law proposed the setting up of a dedicated Construction Court and the introduction of adjudication as a specialised, speedy and cost-effective resolution of disputes. These proposals were subsequently materialised.
3. When the Construction Industry Payment and Adjudication Bill was in the midst of being passed, the Bar continued to work with the then KL Regional Centre for Arbitration (“KLRCA”) to organise a number of courses for our Members. We always knew that construction law would be an important area of law with numerous opportunities for our Members and hence, we wanted to equip our Members with the best possible knowledge when CIPAA was enacted.
4. Moving forward, it has been closed to six years since CIPAA came into force. The impact and popularity of CIPAA are still consistently increasing as there are more and more registered cases with AIAC since CIPAA took effect. In light of this positive development, the BCCCL continues to provide training to Members of the Bar in construction law and oversees the development and practices in the area of construction law. In the busy, yet fruitful 2019/2020 term, the BCCCL met with the Construction Court Judges, YA Dato’ Lim Chong Fong and YA Dato' Hajah Aliza binti Sulaiman to discuss issues relating to practice of construction law, paid a courtesy visit to the Construction Industry Development Board to promote best practices in construction law and the BCCCL also organised seminars throughout Peninsular Malaysia.
5. At the end of last year, the BCCCL met with the AIAC. It was raised in these meetings that some potential reforms to CIPAA would be needed. A circular was issued to Members of the Bar and adjudicators to provide feedback on the potential reforms to CIPAA. Pursuant to the overwhelming and encouraging responses received, it is important that we have this public forum today to discuss responses to the circular and ascertain whether reforms to the CIPAA are necessary, and if so, which portions of the CIPAA requires review and amendment.
6. The topics today cover the adjudication process and scope of CIPAA, enforcement challenges to adjudication decisions, adjudicator and adjudication authorities, and CIPAA Regulations. We hope to gather all the ideas and opinions from our distinguished speakers today to be presented to the stakeholders of the construction industry in upcoming meetings. Most important, we need your active participation and feedback during the Q&A sessions.
Ladies and Gentlemen,
7. Prior to the commencement of CIPAA, the construction industry was plagued with cash flow issues. Non-payment for work done affected everyone in the contractual chain connected to the construction project, particularly the numerous sub-contractors, sub-subcontractors and suppliers down the contractual ladder. CIPAA was enacted to facilitate regular and timely payment in the construction industry and to provide a mechanism for speedy dispute resolution through adjudication and remedies for recovery of payment in the construction industry.
8. However, problems have been raised by our Members over the years. It was reported that more than 50% of the adjudication cases were re-litigated or re-arbitrated. While adjudication was intended to provide quick, rough justice to the parties, parties who are unsatisfied with the adjudication award tend to appeal to the Courts. There is no finality in adjudication awards and some of the adjudication awards have been set aside by the Courts.
9. Further, the adjudication process is becoming longer and more complex than initially intended. The main intended beneficiaries who are the small industry players are now discouraged from participating in adjudication proceedings.
10. It is crucial that confidence in adjudication proceedings is restored. The construction sector is expected to improve in 2020 with growth rate of 3.7% year-on-year, on account of acceleration and revival of mega projects as well as the building of affordable homes, according to the Ministry of Finance's (MoF) Economic Report 2019/20.
11. We look forward to receiving views and feedback expressed in this public forum so that we can close the loopholes found in CIPAA and parties can resolve their construction disputes in a swift and amicable manner without resolving to litigation in Courts.
12. Lastly, to the organising committee of this public forum, thank you for putting this event today. I would also like to thank our speakers today for their hard work and effort, in particular Members of the Judiciary who are taking time off their busy schedule to be with us.
13. Before we part, allow me to invite all of you to lend your support to the Bar’s biennial flagship event — the International Malaysia Law Conference (“IMLC”), themed “Navigating the Present, Exploring the Future”, which will be held from 12 to 14 August 2020, in Kuala Lumpur. The last IMLC held in 2018 received enormous support from the Judiciary, Government officials, NGOs and Members of Parliament. We hope that through this Conference, legal professionals can be inspired and empowered and be ready to embrace the future. With that, I wish you all a meaningful and productive forum.
Abdul Fareed Abdul Gafoor
26 February 2020