1. What is CIPAA 2012?

It refers to the Construction Industry Payment and Adjudication Act

2012 ("CIPAA" or the "Act") been gazetted since 22 June 2012.
CIPAA is also accompanied by the Construction Industry Payment
and Adjudication (Exemption) Order 2014 (the "Order") and the
Construction Industry Payment and Adjudication Regulations 2014
(the "Regulations").

It is an act to facilitate the resolution of dispute relating to payment.

The concept is Pay Nowand Argue Later aimed to resolve cash
flow starvation problem in the construction industry.

So to any of you out there who are being deprived from payment for
work done, please do take the initiative to study how CIPAA 2012
can be used to ease your problem.

2. When does it come into effect?

It came into effect on 15 April 2014.

3. My Contract was way back before 15 April 2014 and has

unresolved payment issues, can I lodge a claim under CIPAA 2012?

Yes, CIPAA 2012 apply retrospectively!

The High Court in UDA HOLDINGS BHD V BISRAYA

CONSTRUCTION SDN BHD (24C-6-09/2014) and CAPITAL
AVENUE DEVELOPMENT SDN BHD V BAUER (M) SDN BHD
(24C-5-09/2014), had determined that CIPAA 2012 was intended to
apply retrospectively, namely, subject to sections 3 and 41 of the Act,
the Act applies to every construction contract made in writing within
the meaning of Section 4 of the Act regardless of when it was made
and under which a payment claim is made.

4. What is the scope and applicability of CIPAA 2012?

It applies to;

(a) Every Construction Contracts

(b) Such contracts must be made in writing
(c ) Relating to construction works
(f) Carried out within Malaysia (wholly or partially)

Therefore the parties includes those involved in construction,

individuals (subject to Section 3 of the Act.), Corporate Bodies,
Statutory Bodies, and The Government (including its agencies etc.),
Consultants, Suppliers , Fabricators, Erectors, etc.

Specific exclusion of CIPAA 2012 as the follows;

Section 3 says that the Act does not apply 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.

5. Any Contracts/Parties Exempted from the application of CIPAA

2012?

The exemption is expressed via the Construction Industry Payment

and Adjudication (Exemption) Order 2014. There are 2 categories in
general.
The first category of government construction contracts were
contained in the First Schedule of the Exemption order, namely, a
contract for any construction works that involve emergency,
unforeseen circumstances and that relate to national security or
security related facilities.

The second category of government construction contracts are

contained in the Second Schedule of the Exemption order, that is,
construction contracts with the Government of the contract sum of
RM20 million and below.

With regards to this second category, the exemption order merely

exempts these contracts from the application of subsections 6(3), 7(2),
10(1), 10 (2), 11(1) and 11(2) of CIPAA 2012, and relates to the
timeline for submissions and replaced with a set of longer timelines
for such submissions. This is a temporary exemption from April 15,
2014 to Dec 31, 2015.

6. My dispute has been referred to arbitration/court but still a long

way to go, can I claim under CIPAA 2012? Is the decision
adjudicated under CIPAA final?How fast is fast is the adjudicators
award?

Yes you can.

The decision under CIPAA 2012 is temporarily but immediately

binding pending the final resolution of the subject disputes by
arbitration, litigation or agreement between the parties. In the interim,
the losing party is required to comply with the adjudicators decision
and pay the adjudicated amount unless the decision has been stayed or
set aside by the High Court. It is not the case whereby the case can be
simply brought over to arbitration or litigation if the decision is not in
the favour of one party. The adjudication decision can only be set
aside on limited grounds, namely, where the adjudication decision
was improperly procured through fraud or bribery; there has been a
denial of natural justice; the adjudicator has not acted independently
or impartially; or the adjudicator has acted in excess of his
jurisdiction.

However, if there is no challenge to the decision taken, then it will

achieve finality.

The adjudicator has 45days to decide and publish his award upon
exchange of documents. The whole process will take 70 days from
KLRCAs appointment of Adjudicator to the publication of award.

7. Do I need Lawyers to represent me in the adjudication under

CIPAA 2012

You dont need to be represented by lawyers.

The proceedings and procedures are simple and self-explanatory. Its

just a matter of filling the Forms as been guided by KLRCA.

However you may want to employ Claims Consultants, Construction

Professionals, or even Lawyers if your case is of crucial
legal/technical complexity and you want the best out of your case.

Remember! If you want to employ party to assist and represent you,

you must appoint those who are experienced and knowledgeable in
technical and matters. The objective of seeking remedy under CIPAA
2012 is to get speedy resolution. If the party that you employ to assist
and represent you are learning the procedures and technical matters
(including those technical jargons) from this proceeding, then you
defeat the purpose of obtaining a speedy and less expensive cost for
the resolution of your dispute.

8. How does CIPAA affect my contract?

It affects your contract in the following ways;

(a). In addition to arbitration as a dispute resolution solution

commonly incorporated in construction contract, now you have
CIPAA 2012 as a mandatory statutory adjudication for which parties
can invoke.

(b). The following payment provisions cannot be enforced although

been agreed by the parties in their contract;
(i) Back to Back Payment
(ii) Pay when Paid
(iii) Payment after availability of fund
(iv) Pay after drawdown of financial facilities

(c) Now, 3 immediate remedies available after an adjudication

decision is made despite contrary provisions in your contracts;
(i) Suspend Work
(ii) go slow / reduce work progress
(iii) Can seek the principal/client to pay directly the amount due

9. Can a party ignore Adjudication Procedure under CIPAA 2012?

No, he cannot. The process will go on despite whether or not the other
party is present. It is a mandatory statutory process that does not
require the agreement of the parties to commence the process and
prevails over any contractual agreements to the contrary between the
parties.

Adjudication under CIPAA 2012 is a summary procedure for

resolution of disputes under a construction contract. It allows a party
(the claimant) who is owed monies under a construction contract to
have the disputes resolved with the non-paying party (the
respondent) in a quick and cheap manner. Disputes which may be
referred to adjudication under CIPAA relate to payment for work
done and services rendered under the express terms of a construction
contract.

Adjudication under CIPAA 2012 can be commenced at any time

whether during or after project completion.
So if you are served with claims for payment under CIPAA 2012, do
act upon it!

10. I have heard about KLRCA, what are their roles in CIPAA 2012
Adjudication? Shouldnt they be concern about arbitration instead?

KLRCA plays key role in being the default appointing,

administrative and training authority for statutory adjudication. The
KLRCA has put in place the internal infrastructure to handle the
administrative process of statutory adjudication at the centre.
For all these services, KLRCA charges a small ranges of fees to the
parties. The fees can be viewed on their webpage.

--------------------
Brief notes to know and understand CIPAA 2012 in the simplest
form. Hope that all can benefit from it somehow.