Costs of CIPAA and Recovery of Costs in CIPAA

Before resorting to mount a CIPAA claim under Construction Industry Payment and Adjudication Act 2012 (CIPAA), one would understandably also want to fully appreciate the costs typically involved in the CIPAA Proceedings. 

This article sets out the costs typically involved in CIPAA and explains whether the costs of CIPAA can be recovered by the winning party.

This article will also explains when shall the costs be payable and whether the costs incurable in CIPAA Adjudication Proceeding can be recovered by the winning party.

Costs of CIPAA

Ordinarily, there are usually 3 types of costs incurable in a CIPAA Proceedings:

Adjudicator’s Fee

The Adjudicator’s Fee is a scale fee based on the claimed amount.

There are 2 types of Adjudicator’s Fee, namely the ‘Standard Fee’ and ‘Recommended Fee’.

Standard Fee

The Standard Fee is the scale fee prescribed by the Construction Industry Payment & Adjudication Regulations 2014. If the parties and Adjudicator fail to agree on the fee, then the Standard Fee shall apply.

The Adjudicator’s Standard Fee Calculator can be found here.

The scale of standard fee is as below:

No.Amount in Dispute (RM)Standard Fees (RM)
1.50,000 and below2,760
2.50,001 to 150,0005,760
3.150,001 to 300,0007,087 + 2.7% of excess over 150,000
4.300,001 to 800,00011,137 + 1.08% of excess over 300,000
5.800,001 to 1,300,00016,537 + 1.08% of excess over 800,000
6.1,300,001 to 1,800,00021,937 + 1.2826% of excess over 1,300,000
7.1,800,001 to 2,300,00028,350 + 0.3374% of excess over 1,800,000
8.2,300,001 to 2,800,00030,037 + 0.3376% of excess over 2,300,000
9.2,800,001 to 3,300,00031,725 + 1.4714% of excess over 2,800,000
10.3,300,001 to 5,000,00039,082 + 0.54% of excess over 3,300,000
11.5,000,001 and above50,000
Adjudicator’s Standard Fee

On the other hand, the Recommended Fee is the scale fee prescribed by AIAC (KLRCA CIPAA Circular 2) as the AIAC opines that the Standard Fee is too low.

The Adjudicator’s Recommended Fee Calculator can be found here.

The scale of the Recommended Fee is as below:

No.Amount in Dispute (RM)Recommended Fee (RM)
1.Up to 150 0008,400
2.150 001 to 300 0008,400 + 3.5% of excess over 150 000
3.300 001 to 800 00013,650 + 1.3% of excess over 300 000
4.800 001 to 1 300 00020,150 + 1.25% of excess over 800 000
5.1 300 001 to 1 800 00026,400 + 1.1% of excess over 1 300 000
6.1 800 001 to 2 300 00031,900 + 0.7% of excess over 1 800 000
7.2 300 001 to 2 800 00035,400 + 0.5% of excess over 2 300 000
8.2 800 001 to 3 300 00037,900 + 0.683% of excess over 2 800 000
9.3 300 001 to 5 000 00041,315 + 0.65% of excess over 3 300 000
10.5 000 001 to 10 000 00052,365 + 0.365% of excess over 5 000 000
11.10 000 001 to 15 000 00070,615 + 0.38% of excess over 10 000 000
12.Over 15 000 00089,615
Adjudicator’s Recommended Fee

The Adjudicator’s Fee calculator can be found here.

As a matter of practice, an Adjudicator will normally invite the parties to agree on ‘Recommended Fee’. If the parties fail to agree, then the Standard Fee will apply.

Administrative Fee

Over and above the Adjudicator’s Fee, the parties will also have to pay the Administrative Fee to the AIAC.

The Administrative Fee payable is calculated at 20% of the Adjudicator’s Fee pursuant to Schedule III of the AIAC Adjudication Rules & Procedure.

The AIAC’s Administrative Fee calculator can be found here.

Further, the parties may also incur the legal fees (if they appoint lawyer) and/or consultant fees (if they appoint consultant) to represent them in the Adjudication Proceedings.

While the parties may represent themselves in a CIPAA Adjudication Proceeding, it is advisable for the parties to engage a lawyer / consultant to properly advise them. This is especially beneficial as the lawyers / consultants are typically well verse with technical objection, argument which is legal in nature and jurisdictional challenges.

Contact us now for our fee quote and enjoy free consultation for the first session.

When and who to pay for Adjudicator’s Fees and Administrative Fees? 

In the usual course of practice, the Adjudicator will invite both parties to deposit 50% of the Adjudicator’s Fee and Administrative Fee at equal shares to the AIAC.

If the Respondent fails to make payment, the Adjudicator will proceed to invite the Claimant to deposit the remaining 50% of the Adjudicator’s Fee and Administrative Fee to AIAC.

If Adjudicator’s Fee and Administrative Fee are not fully paid, the Adjudicator is entitled to withhold the Adjudication Decision until and unless the full payment is deposited with the Director of AIAC.

Recovery of Cost by the Winning Party

Pursuant to Section 18 of CIPAA, the Adjudicator shall order ‘costs follow event’.

In simple words, this mean that the losing party will have to pay costs to the wining party.

Typically, the costs awarded by the Adjudicator will encompass all the costs incurable mentioned above.

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