Guide
A guide to CIPAA 2012
These notes follow the questions ordinarily raised before instructions are taken. Each one opens with the answer. They describe the Act and the manner in which a reference is conducted. They are not an opinion on a particular contract.
- 01What is CIPAA?CIPAA is the Construction Industry Payment and Adjudication Act 2012. It is Malaysia’s statute for a payment dispute under a written construction contract: an adjudicator decides it on a working-day timetable, and the decision can be enforced without waiting for a full trial.
- 02Why use CIPAA?Court and arbitration remain available. CIPAA provides a shorter timetable for a payment dispute, and it avoids conditional payment provisions.
- 03When does CIPAA apply?CIPAA applies to a construction contract made in writing for construction work carried out wholly or partly in Malaysia, including certain contracts with the Government. The exceptions are set out below.
- 04Is CIPAA compulsory?An unpaid party is not obliged to commence adjudication. A non-paying party may not contract out of the Act, or refuse to participate in order to defer payment.
- 05How does CIPAA help cash flow?A construction project depends on the next payment. CIPAA provides a statutory route where that payment is withheld.
- 06What solution does CIPAA offer?CIPAA offers an unpaid contractor, subcontractor, supplier or consultant a way to have the payment dispute decided: a payment claim, a notice of adjudication, and a decision that can be enforced in the High Court. It does not rewrite the contract.
- 07What disputes are commonly referred?An instruction commonly begins with one unpaid sum. The contract usually raises further issues, which are identified before any payment claim is served.
- 08What does the adjudicator decide?The adjudicator determines the payment dispute referred, within the periods prescribed by the Act.
- 09How is a CIPAA decision enforced?Enforcement is by application to the High Court under section 28 of CIPAA. Once the decision is entered as a judgment, the ordinary modes of execution are available.
- 10When is advice given before a claim?Where the dispute is still governed by the contract, we advise on payment, certification, extension of time and termination before a notice of adjudication is considered.