CASE UPDATE: CIPAA Applies Prospectively

Jack-in Pile (M) Sdn Bhd v. Bauer (Malaysia) Sdn Bhd & Another Appeal [2020] 1 CLJ 299

Ireka Engineering & Construction Sdn Bhd v. PWC Corporation Sdn Bhd & Other Appeals [2020] 1 CLJ 193

The Federal Court, being the apex court of Malaysia, recently found that the provisions of CIPAA affect the substantive rights of the parties.

As such, in accordance with the doctrine of statutory interpretation, the Federal Court ruled that CIPAA should not be interpreted retrospectively so as to impair an existing right or obligations. Instead, CIPAA should be interpreted prospectively.

What does this mean?

As a result of the Federal Court’s ruling, CIPAA applies only to construction contract executed after 15th April 2014, which is the date of coming into operation of CIPAA.

Any adjudication decision which dealt with construction contract executed before 15th April 2014 may be liable to be set aside under Section 15 of CIPAA on the ground that the Adjudicator has acted in excess of jurisdiction.

Having said that, for payment disputes arising out of the construction contract executed before 15th April 2014, the parties may still resort to court action and/or arbitration (depending on whether the contract provides for arbitration clause).

***Update:-

Following the Federal Court’s decisions, AIAC, the statutory appointed adjudication authority, had announced that the AIAC would no longer register payment disputes arising from construction contracts which is executed prior to 15th April 2014:

AIAC's Announcement

* Source: https://www.aiac.world/news/283/PROSPECTIVE-APPLICATION-OF-THE-CONSTRUCTION-INDUSTRY-PAYMENT-AND-ADJUDICATION-ACT-2012

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