Prospectivity Trumps Retrospectivity, And No, It's Not Fake News!

INTRODUCTION Prior to the decisions of the Federal Court ("FC") in Jack-In Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd (and Another Appeal) [2019] 7 AMR 348 ("Bauer") and Ireka Engineering & Construction Sdn Bhd v PWC Corporation Sdn Bhd (and 2 Other Appeals) [2019] 7 AMR 309 ("Ireka"), there was a cloud of uncertainty arising from conflicting decisions as to whether the Construction Industry Payment and Adjudication Act 2012 ("CIPAA") applies prospectively or retrospectively. WHERE IT ALL BEGAN The issue as to the prospective/retrospective application of CIPAA first came to light in UDA Holdings Bhd v Bisraya Construction Sdn Bhd & Anor and Another Case [2015] 5 CLJ 527 ("UDA Holdings") where the High Court decided, inter alia, that:

adjudication is nothing more than a dispute resolution mechanism and CIPAA essentially provides a choice of forum and does not affect any existing rights conferred by any written law; it is a well-established principle that legislation providing for this change of forum in the form of an additional forum, i.e. statutory adjudication, operates retrospectively unless there is provision to the contrary; the laws adopting the statutory adjudication regime in several other jurisdictions (e.g. the United Kingdom, New Zealand, Singapore, New South Wales, Queensland and Northern Territory of Australia) expressly provide that their statutory adjudication regimes only apply to construction contracts made after their respective legislation have come into force; the Malaysian Parliament chose not to include a similar provision in CIPAA; in any event, a purposive interpretation of CIPAA warrants a retrospective application; and reading that CIPAA is available regardless of when the construction contract or payment dispute arose would do no harm or violence to the plain language of CIPAA. The High Court's decision in UDA Holdings was upheld by the Court of Appeal (although no grounds of judgment was delivered). However, the Court of Appeal in Bauer (Malaysia) Sdn Bhd v Jack-In Pile (M) Sdn Bhd & Another Appeal [2018] 10 CLJ 293 ("Bauer CA") departed from UDA Holdings, holding that CIPAA applies prospectively. These conflicting decisions left stakeholders in the construction industry in a predicament as to whether the provisions of CIPAA would apply to construction contracts entered into before CIPAA came into operation on 15 April 2014. CRUNCH TIME In view of the conflicting decisions of the Court of Appeal in UDA Holdings and Bauer CA, leave to appeal was granted by the FC in Bauer and Ireka. The two leave questions in Bauer may be summarised as follows –

Whether CIPAA applies to construction contracts entered into before the date on which CIPAA come into operation; and If the answer to question (1) is affirmative, does it follow that section 35 of CIPAA should apply to construction contracts entered into before CIPAA came into operation. In Ireka, the question of law posed to the FC was whether CIPAA gives rise to substantive rights and is consequently not retrospective in nature, making the adjudication decision in this case liable to be set aside. Although framed differently, the leave questions in these appeals essentially required the FC to determine whether CIPAA operated retrospectively or prospectively. On 16 October 2019, the FC issued separate decisions in Bauer and Ireka in which it unanimously held that CIPAA applies...