This document provides an overview of the Construction Industry Payment and Adjudication Act 2012 (CIPAA) in Malaysia. It discusses what CIPAA is, its main objectives to provide timely payment and dispute resolution in the construction industry, and the adjudication process for resolving payment disputes. Key points covered include that adjudication decisions are temporarily binding pending final resolution by arbitration or courts, KLRCA oversees the adjudication process and determines adjudicator standards and fees, and possible impacts of CIPAA include its long time frames compromising timely payment and respondents sometimes being disadvantaged.

1. CIPAA 2012
THE STATUTORY
ADJUDICATION

2. WHAT IS CIPAA?
2
Construction Industry Payment and Adjudication Act
22 June 2012
CIPAA enacted in
Parliament
15 April 2014
CIPAA came into
operation

3. COVERAGE OF CIPAA 2012
Responsibility
of KLRCA
Competency Standard
& criteria of adjudicators
Standard Fees &
Expense
of KLRCA
Factors
to be considered in
awarding costs
Governing Fee &
Expense
of Adjudicators
3

4. IMPORTANT CHARACTERISTICS OF CIPAA
Temporary decision
It does not constitute
finality but immediately
binding pending final
resolution by arbitration.
No contract out allowed
Entering into a
supplementary contract
among contracting
parties is prohibited.
Statutory adjudication
Impose on payment
related disputes in
construction industry.
4

5. MAIN OBJECTIVES OF CIPAA 2012
▣ A cheaper and speedy dispute resolution through adjudication
▣ Ensure and encourage regular and timely payment
▣ Eliminate ‘pay when paid’ arrangement (Sec 35)
▣ Reduce cash flow related problems
▣ Provide remedies for payment recovery
▣ A mandatory statutory process
5

6. Applications & Restrictions of CIPAA
6
SEC 2
CIPAA applies to:
- Written construction
contract
- Related to construction
work
- Wholly / partly in M’sia
SEC 3
Not applicable to a
construction contracts
by a natural person
SEC 4
Restricted to claims for
payment of work done
or services rendered

7. ADJUDICATION PROCESS OF CIPAA 2012
7

8. ● 8
ADJUDICATION DECISION
Section 13 of CIPAA 2012
Adjudication decision is binding unless
Fraud / Bribery
Denial of Natural
Justice
Not independently /
impartially
Excess of his jurisdiction
Written agreement between parties
The dispute is finally decided by
arbitration / court

9. 9
ADJUDICATION DECISION
Suspend performance
&
Reduce the rate of progress of
performance/consultancy
services
Winner may enforce adjudication decision by:
Apply to high court
Seek direct payment from
employer

10. 10
ADJUDICATION AUTHORITY
K L R C A
Kuala Lumpur Regional Centre for Arbitration
(Part V of CIPAA)

11. 11
K L R C A
Kuala Lumpur Regional Centre for Arbitration
(Part V of CIPAA)
KLRCA CIPAA CIRCULAR 01
On Section 41 of CIPAA 2012
NOTHING IN THE ACT
shall affect any proceedings relating to any PAYMENT DISPUTE
under a construction contract which had been commenced an any court
or arbitration before the coming into operation of the act.

12. 12
K L R C A
Kuala Lumpur Regional Centre for Arbitration
(Part V of CIPAA)
KLRCA CIPAA CIRCULAR 03
“Construction Contract Made in Writing”
1. If the contract is made in writing
2. If contract is made by exchange of communications in writing;
or
3. If contract is evidenced in writing

13. 13
POSSIBLE IMPACT OF CIPAA 2012
-
Long time Frame for
adjudication process
Respondents
disadvantaged
Professionals may,
similarly to arbitration
& litigation
Insufficient trained
adjudicators
Unaware &
ill-prepared on the
effect of the Act
Concurrent causes of
action increase
litigation

14. Q1.
If Con. & Em. enter into a written contract without a certain
payment term, how Con. receives his payment with the help of
CIPAA?
14

15. “Sec 36(4)
The due date for payment under subsection (3) is thirty calendar
days from the receipt of the invoice.
- Provided contractor must prove invoice and progress claim
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16. Q2.
How a winning party enforce the adjudication decision?
16

17. “
1. Register the decision as a Court Judgment or Order and
enforce the decision as if it is a judgment or order of the High
Court.
2. Suspend the work
3. Seek direct payment from the principal of losing party
17

18. Q3.
If the non-paying party fail to respond to the payment claim within
10 working days, can the unpaid party proceed to adjudication
process?
18

19. “
- Yes
- If the non-paying party fails to respond, it is deemed to have
disputed the entire payment claims under Section 6 (4)
- Under Section 7, the unpaid party has the right to refer a
dispute to adjudication after the expiry of the period to serve
a payment response
19

20. Q4.
If the adjudicator rejects his appointment or fails to indicate his
acceptance of the appointment, what can the parties do?
20

21. “
Section 22 (3)
If the adjudicator rejects his appointment or fails to indicate his
acceptance of the appointment within the period specified in
subsection (2), the parties may proceed to appoint another
adjudicator in the manner provided under section 21.
21

22. Q5.
What is the responsibility of KLRCA in Malaysia?
22

23. “
To determine the standard and criteria required of an
adjudicator in Malaysia
To determine the term and fee of the appointment
23

24. Q6.
Give two possible impact of CIPAA 2012
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25. “Comparatively long time frame for adjudication process
compromise the very aim of the act to expedite cash flow.
Respondents generally disadvantaged if ‘ambushed’ by
claimants.
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26. Thank you !