Introduction This article aims to provide a full and comprehensive guide to the Malaysia CIPAA (Construction Industry Payment and Adjudication
Construction Industry Payment and Adjudication Act 2012
Ever since the implementation of Construction Industry Payment and Adjudication Act 2012 (CIPAA), CIPAA has become a popular alternative dispute resolution to resolve payment dispute. The contractors and consultants will often time resort to CIPAA Adjudication to recover the outstanding payment / fees.
But one may ask what are the benefits / advantages of resorting to CIPAA Adjudication Proceeding compared to arbitration and litigation then?
The CIPAA Adjudication mechanism has the following practical advantages / benefits:
1. Expeditious Process
2. High Success Rate
3. All Conditional Payment Clause is void
4. Direct Payment from Principal
Suspension of Work is not a breach of contract
5. Pay Now, Argue Later!
6. No positive counterclaim from Respondent
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.
CIPAA Adjudication Proceeding offers a quick and efficient procedure to this problem as the Adjudication Decision can be rendered within 80 – 95 working days and the Winning Party may then enforce the Adjudication Decision and recover the outstanding payment or professional fees.
In this article, we will set out the procedure and the complete guide of the CIPAA Adjudication Proceeding from A – Z: 1. Payment Claim 2. Payment Response, 3. Notice of Adjudication 4. Adjudication Claim, 5. Adjudication Response, 6. Adjudication Reply, 7. Adjudication Decision.
CIPAA (Construction Industry Payment and Adjudication Act 2012) is a legislation enacted on 15th April 2014 by the Parliament of Malaysia to resolve the construction payment dispute and alleviate the cash flow in the construction industry through the statutory CIPAA adjudication process.
The mechanism of CIPAA offers ‘rough justice’ to the Claimant and it is often described as ‘pay now, argue later’. This is evident from the statistic provided by AIAC in 2017 that a whooping 89.28% of the CIPAA Adjudication Decision is awarded in favour of the Claimant.
But what are the requirements to launch a CIPAA claim?
Under the Part IV of Construction Industry Payment and Adjudication Act 2012, there are 3 methods of enforcement which can be exercised concurrently:-
Section 28: Enforcement of Adjudication Decision as Judgment
Section 29: Suspension or reduction of rate of progress of Performance
Section 30: Direct Payment from Principal
Winding up Proceeding: The winning party may also seek to enforce the Adjudication Decision by issuing a Statutory Demand under Section 466 of Company Act 2016. If the losing party fails to meet the demanded Adjudicated Sum within 21 days, the winning party may proceed to wind up the losing party and liquidate its assets to meet the debt.
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