Arbitration

A construction contract commonly refers disputes to arbitration. The parties are then bound by that agreement. Where they cannot agree an arbitrator, the appointing body in Malaysia is commonly Pertubuhan Arkitek Malaysia (PAM) or the Asian International Arbitration Centre (AIAC).

The nature of the reference

The arbitrator decides the dispute that was referred. There is no appeal in the way a court judgment can be appealed. Hearings can be fixed around the parties, and the documents stay confidential unless both sides agree to disclose them. That privacy is why many commercial parties prefer it.

The cost is higher than a court proceeding. The arbitrator’s fee, the institution’s administrative charges, and the cost of representation are all payable. There is no equivalent fee for a judge. Arbitration is the appropriate forum where the contract requires it, or where the dispute is wider than a payment claim under CIPAA.

Scope of the instruction

• Identify whether the contract contains an arbitration clause and what it actually requires.
• Advise on procedure before and during the reference.
• Help select a suitable specialist to represent you, drawing on our work with construction disputes.
• A carefully drafted clause avoids later arguments about whether the arbitration can even start.

An agreement to arbitrate does not exclude CIPAA. A payment dispute under a construction contract may still be referred to adjudication.