CIPAA Proceedings

What is the Construction Industry Payment and Adjudication Act (CIPAA)?

The Construction Industry Payment and Adjudication Act 2012 (CIPAA) is a Malaysian law designed to provide a fast and cost-effective dispute resolution mechanism for construction-related payment disputes. It aims to ensure that contractors, subcontractors, consultants, and suppliers are paid promptly for their work and services by providing a statutory right to adjudication.

Who can initiate CIPAA proceedings?

Any party involved in a construction contract, including contractors, subcontractors, suppliers, and consultants, can initiate CIPAA proceedings if they have a payment dispute. This includes claims for payment for work done, services rendered, or materials supplied under a construction contract.

What are the key steps in the CIPAA adjudication process?

The CIPAA adjudication process involves several key steps:

1. Payment Claim & Payment Response: The claimant issues a Payment Claim to the respondent, outlining, among other details, the nature of the disputes and the amount claimed. The respondent responds to the Payment Claim by serving a Payment Response on the claimant. The respondent can either admit or dispute the Payment Claim wholly or partially. If the respondent does not serve a Payment Response on the claimant, the respondent is deemed to dispute the entire Payment Claim.
2. Notice of Adjudication: The claimant issues a Notice of Adjudication to the respondent, outlining the nature of the payment dispute.
3. Appointment of Adjudicator: Both parties must agree on an adjudicator. If they cannot agree, the Kuala Lumpur Regional Centre for Arbitration (KLRCA) appoints one.
4. Submission of Claim: The claimant submits a written claim to the adjudicator, detailing the dispute and the amount claimed.
5. Response: The respondent submits a written response to the adjudicator, addressing the claimant’s claim.
6. Adjudicator’s Decision: The adjudicator reviews the submissions and issues a decision within 45 working days from the date of the response or the claimant’s reply (if any).

What are the advantages of using CIPAA for resolving payment disputes?

The advantages of using CIPAA for resolving payment disputes include:

• Speed: CIPAA provides a relatively quick resolution, with decisions typically rendered within 45 working days.
• Cost-Effective: Adjudication under CIPAA is generally less expensive than litigation or arbitration.
• Enforceability: Adjudicator’s decisions are binding and enforceable as a judgment of the court, although they can be challenged and set aside in certain circumstances.
• Cash Flow: CIPAA helps maintain cash flow in the construction industry by ensuring timely payments.

Can CIPAA decisions be challenged or set aside?

Yes, CIPAA decisions can be challenged or set aside on limited grounds. These include:

• Jurisdictional Errors: If the adjudicator lacked jurisdiction or exceeded their jurisdiction.
• Breach of Natural Justice: If there was a breach of natural justice in the adjudication process.
• Fraud: If the decision was obtained by fraud.
• Adjudicator’s Impartiality: If the adjudicator failed to act independently.

A party wishing to challenge a CIPAA decision must apply to the High Court to set aside the decision. However, until the decision is set aside, it remains enforceable.

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Disclaimer

_{Articles published in this website are for general informational purpose only and shall not constitute any form of legal advice to any specific case. Kindly contact us if you are currently experiencing a legal dilemma related to this topic and need further legal consultation.}