CIPAA: Forward Or Backward?

Loshini Ramarmurty explains the first reported case on the Construction Industry Payment and Adjudication Act 2012

The Construction Industry Payment and Adjudication Act 2012 ("CIPAA") came into force on 15 April 2014 ("Commencement Date"). Thereafter, the Kuala Lumpur Regional Centre for Arbitration ("KLRCA") issued Circular 01 dated 23 April 2014 which states that it would administer and appoint adjudicators for adjudication cases in respect of any payment disputes "which arose under a construction contract on or after 15 April 2014, regardless of whether the relevant construction contract was made before or after 15 April 2014."

This position has now changed in light of the recent decision of UDA Holdings Bhd v Bisraya Construction Sdn Bhd (24C-6-09/2014) ("UDA Holdings") and Capitol Avenue Development Sdn Bhd v Bauer (M) Sdn Bhd (24C-5-09/2014) ("Capitol Avenue Development") which, inter alia, deals with the fundamental issue as to whether CIPAA operates retrospectively or prospectively.

BRIEF FACTS

The disputes in UDA Holdings arose out of a construction contract dated 16 October 2009, whilst those in Capitol Avenue Development, from a letter of award dated 13 May 2013.

Court proceedings in the two cases were filed by the respective plaintiffs, namely UDA Holdings Bhd ("UDA") and Capitol Avenue Development Sdn Bhd ("Capitol"), around the same time. The issues in both cases arose from adjudication proceedings commenced under CIPAA and can be broadly divided into two categories.

The first concerned the challenge by the respondents, in both instances, of the jurisdiction of the adjudicator and the locus standi of the claimant to initiate adjudication proceedings.

In the second category of issues, the respondents in both cases disputed the applicability of CIPAA to their respective disputes as their payment disputes had arisen under construction contracts which had been entered into before the Commencement Date.

The Court took the view that the first set of issues relating to the locus standi of the claimant in the adjudication proceedings and the jurisdiction of the adjudicator should be taken up before the adjudicator instead of the Court and accordingly, declined to deal with those issues.

As regards the second category, which concerned the operation of CIPAA, i.e. whether it applies to payment disputes and underlying contracts that were made before the Commencement Date of CIPAA, the Court was of the view that the cases should be heard together as the issue was common to both cases. KLRCA attended the Court proceedings as amicus curiae.

THE POSITIONS CANVASSED

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