PAMNorthernChapter

p
CPD
CIPAA+Architects
Ar David Cheah
ArDavidCheah
6 Dec 2014
6Dec2014

CONTENTS
1.0

INTRODUCTION
1.1
1
1
1.2
1.3
1.4
15
1.5

2.0

slides

1 - 8

Adjudication : definitions & meaning

Type of adjudication, essential features, subject matters
Statutory Adjudication : general features & legislation
Procedural steps
Principal Aims of Adjudication

CONSTRUCTION CONTRACTS

9 - 11

2.1
2
1 S4 CIPAA 2012
2.2 Type & Nature
2.3 Adjudicability

3.0 MISCELLANEOUS ISSUES IN STATUTORY ADJUDICATION

3.1
3.2
3.3
3.4

Commencement
Contracting out
Parties
Modes of Service

12 - 14

CONTENTS
4.0

SCOPE OF SUBJECT MATTER

4.1
42
4.2
4.4
4.5

5.0

6.0

15 - 18

Payment & Non-payment Issues

What is payment ?
Conditional payment
Default provisions in the absence of terms of payment

IMPACT ON CONSTRUCTION INDUSTRY & CONTRCTING PARTIES,

ON 3RD PARTIES & IMPACT OF CIPAA

19 - 21

PRINCIPAL COSTS

22 - 24

6.1
6.2
6.3
6.4
6.5
7.0

slides

Cost of adjudication proceedings

Costs of reference
Costs of decision
Costs of KLRCA
Adjudicators fees & expenses

RIGHT TO ADJUDICATE
7.1
7.2
73
7.3
7.4
7.5
7.6

Making of Claim
Response to Claim
D i i off U
Decision
Unpaid
id P
Party
t
Decision to initiate Adjudication
Initiation of Adjudication
Notice of Adjudication

25 - 32

CONTENTS

slides

8.0 APPOINTMENT OF ADJUDICATOR

33 - 35

9.0 COMMENCEMENT OF PROCEEDINGS

36 - 42

9.1
9.2
9.4
95
9.5

Adjudication Claim & supporting documents

Adjudication Response
Adjudication Reply
C d t off Adjudication
Conduct
Adj di ti proceedings
di

10.0

JURISDICTION & JURISDICTIONAL CHALLENGES

43 - 49

11.0

MAKING & DELIVERY OF ADJUDICATION DECISION &

POST-PUBLICATION OF DECISION

50 - 54

0
12.0

ENFORCEMENT
O C

55 - 60

13.0

CONFIDENTIALITY

61 - 62

14 0
14.0

IMMUNITY

63

15.0

CONSOLIDATION OF PROCEEDINGS

64

1.0 INTRODUCTION

ADJUDICATION :
DEFINITIONS
O S AND MEANING
G

DEFINITION BY
B.BENTLEY
is a process where
an independent 3rd
party
p
y is g
given
power
to make an interim
decision
within a short
period of time
on disputes
arising under a
contract between
the p
parties

DEFINITION BY
D. SIMMONDS
A procedure whereby :

when a dispute
b t
between
contracting
t ti
parties arises

MEANING/PROCESS

is a procedure that refers

disputes in a contract to an
agreed/selected 3rd person

the 3rd person is

independent and impartial

a neutral person who

has no connection
with either side

is engaged to examine
the arguments of the
parts, and

the 3rd person has a limited

amount of time in which to
decide or determine

to decide the dispute

the decision or
determination is binding in
the interim unless
subsequently overruled by
arbitration or the courts.

TYPES OF ADJUDICATION

AD-HOC

COMMON TYPES

3 main types :-

Also known as Consensual

Adjudication

Agreed voluntarily by the

parties

Mode of agreement

- Ad-Hoc
- Contractual
- Statutory

CONTRACTUAL

Distinct and having

different characteristics,
procedures and effects

- Oral or
- Preferably in writing

Scope of reference to
adjudication of :

Recommended minimum
contents of agreement

Mandated by law eg by a
specific legislation
eg :

- Clause 34.0
34 0 PAM
Contract 2006 (with &
without quantities)

- HGCRA 1996 (Housing

Grants, Construction and
Regeneration Act 1996)

- Clause 7.2 CIDB Form for

sub-contract work

- New South Wales SOPA

(Security of Payment Act)
1999

- Scope and nature of

disputes
c

STATUTORY

eg :

Express
E
provision
i i states
t t :

- Future disputes; or
- Disputes that have
crystallised

Arises out of a specific express

term or provision of the contract

- Procedural issues
- Effect of decision/
determination
May or may not be a condition
precedent to reference to other
ADR

- Construction Contract Act

2002 (NZ)
- SOPA 2004 (Singapore)
- CIPAA 2012 ((Malaysia)
y )
The Act and Regulations will
stipulate :
- scope and nature of disputes
- procedural issues
- effects of decision /
determination
- miscellaneous matters
It prevails over any ad-hoc and
or contractual adjudication
arrangement between the
parties

COMPLEMENTS
ARBITRATIONAND/OR
LITIGATION
SHORTTIMEFRAME
FROMREFERENCETO
DECISION
INTERIM/INTERMEDIATE
SOLUTION
CANBEINQUISITORIAL
ANDADVERSARIALIN
NATURE

ADJUDICATION :
ESSENTIAL
FEATURES

NONEGOTIATIONS
INVOLVED

MANAGEMENTOF
DISPUTES
STATUTORYOR
CONTRACTUAL
CONTRACTUAL
PROCEDURE
INFORMAL&SUMMARY
PROCEDURE

PAYMENTS
MATTERSUNDER
STATUTE/CONTRACT/
PARTIESAGREEMENT

EXTENSIONOFTIME

VARIATIONORDERSAND
VALUATIONS

ISSUES &
SUBJECT
MATTERS OF
ADJUDICATION

ADJUSTMENTOF
CONTRACTSUMeg.SET
OFFS,etc
WITHHOLDING/DELAY
WITHHOLDING
/ DELAY
OFCONSENTS/
APPROVALS,etc
VALIDITYOF
INSTRUCTIONS

AREWORKSPROPERLY
EXECUTED

DISPUTERESOLUTION
PROCESSFORDISPUTES
UNDER CONSTRUCTION
UNDERCONSTRUCTION
CONTRACTS

ISAJUDICIALPROCESS
ANDNOTAJUDICIAL
PROCEDURE
PROCESSISMANDATED
BYLAW(seenextslide)
DISPUTEREFERREDTOAN
AGREEDORSELECTED
IMPARTIAL3RD PARTY

STATUTORY
ADJUDICATION :
GENERAL
FEATURES

DOESNOTREQUIRE
PARTIESAGREEMENT
TOCOMMENCE
ADJUDICATOR ACTS ON
ADJUDICATORACTSON
FASTTRACKBASISAND
ISSUESOUTROUGHJUSTICE

RIGHTSANDREMEDIES
PRESCRIBED AND
PRESCRIBEDAND
ENFORCEABLEBYLAW
COMPLEMENTSOTHER
DISPUTERESOLUTION
METHODSeg.ARBITRATION,
O S eg
O ,
LITIGATION,etc

HOUSINGGRANTS,
CONSTRUCTIONAND
REGENERATIONACT1996
(UK)

6
BUILDING&CONSTRUCTION
INDUSTRYSECURITYOF
PAYMENTACT1999(NSW)

CONSTRUCTION
CONTRACTSACT2002
(NZ)

BUILDING&CONSTRUCTION
BUILDING
& CONSTRUCTION
INDUSTRYPAYMENTSACT
2004(Queensland)

CONSTRUCTION
CONTRACTS ACT 2004
CONTRACTSACT2004
(WA)

STATUTORY
ADJUDICATION :
LEGISLATIONS

CONSTRUCTIONCONTRACTS
(SECURITYOFPAYMENTACT)
2004 (N T it i
2004(NewTerritories,
Australia)

CONSTRUCTION
CONTRACTSACT2004
(Isle of Man)
(IsleofMan)

CONSTRUCTIONINDUSTRY
PAYMENT&ADJUDICATION
ACT2012(Malaysia)

BUILDING&CONSTRUCTION
INDUSTRYSECURITYOF
PAYMENTACT2006(Victoria)

BUILDING&CONSTRUCTION
INDUSTRYSECURITYOF
PAYMENTSACT2004
(Singapore)

STAGE1

PRELIMINARY
STAGE

STAGE2

INITIATIONOF
ADJUDICATION
STAGE

STAGE3

APPOINTMENT
OF
ADJUDICATOR
STAGE

S5 to 7

S7 and 8

S21 to 23

sub stages :
3 sub-stages

sub stages :
2 sub-stages

sub stages :
2 sub-stages

- making of
payment claim
- payment
p
to claim
response
- decision of
unpaid party

- decision to
initiate
adjudication
- which has not
been paid
- initiation of
adjudication
process

- selection of
adjudicator
- appointment of
j
adjudicator

STAGE4

CONDUCTOF
ADJUDICATION
PROCEEDINGS
STAGE

S9-12, 14, 17,

19, 20 & 24-27
3 sub-stages :
- commencement
of adjudication
proceedings
- submissions
- determination

STAGE5

POSTDECISION
STAGE

Part IV, S15-17

3 sub-stages :
- post publication
of decision
- enforcement of
decision
- enforcement of
other remedies

PRINCIPAL AIMS OF ADJUDICATION

IMPROVED
PAYMENT
PROCESS

for Construction
Contracts (as
defined in S4
CIPAA))
C
to facilitate :

IMPROVED
CASH FLOW

to prohibit
conditional
payment terms
eg.
eg
- pay if paid

- regular and

- pay when paid

- timely

- back to back

payment

PROVIDE
DEFAULT
PAYMENT
MECHANISM

in the absence of
express payment
provisions in the
construction
co
st uct o
contract
to provide default
payment terms

EXPEDITE
DISPUTE
RESOLUTION

adjudication as
an alternative
dispute
eso ut o
resolution
procedure that
is :
- speedy
- cheaper

MAKE
RECOVERY
OF PAYMENT
EFFECTIVE

upon the
conclusion of
adjudication
tto provide
id
remedies for the
recovery of
payment

2.0 CONSTRUCTION CONTRACTS

CONSTRUCTION CONTRACT (S4 CIPAA 2012)

CONSTRUCTION WORK CONTRACT

MEANING
Contract to carry
out Construction
Construction
Work

CONSTRUCTION
WORK : SCOPE
See next page :
Type & Nature

CONSTRUCTION CONSULTANCY CONTRACT

MEANING
Contract to carry
outt Consultancy
C
lt
Services by
consultants and
sub-consultants
Services to be in
relation to
Construction
Work
accounting
services provided
for the
construction firm
is excluded

SERVICES
COVERED
Planning &
f
feasibility
ibili study
d

CONSTRUCTION
WORK : SCOPE
See next page :
Type & Nature

TYPES OF
DISPUTES
Professional
negligence

Architectural
Work

Generally
complex

Engineering

In UK adjudication
procedure to
follow the Model
Adjudication
Procedure
published by the
Construction
I d t Council
Industry
C
il
(CIC)

Surveying
S
i
Exterior & Interior
Decoration
Landscaping ;
and
Project
Management
Services

CONSTRUCTION WORK : TYPE & NATURE

S4 CIPAA 2012

10

TYPE OF WORK

NATURE

PERMANENT
WORKS

CATEGORY (a)

Building

Edifice

For Categories (a) to (e) including :

Construction

- Site clearance
- Soil investigation and
improvement
- Earth-moving
- Excavation
- Laying of foundation
- Site restoration; and
- Landscaping

Extension

Installation

Repair

Maintenance

Renewal

Renovation

Alteration

Dismantling

Demolition

Question : fixtures & fittings ?

Answer : it does not depend on the
method of fixing but on the
existence of an intention to
incorporate the components and
materials as part of the works.

CATEGORY (b)

Drainage work

Harbour works

Irrigation work

Railway

Wall

Fence

Chimney

River control work

1. Peoples Park Chinatown

Development Ltd v
Schindler Ltd (S) Pte Ltd
(1993) : Though the
escalators were held down by
their own weight, CA held they
were permanent features
2. Gibson Lea Retail
Interiors Ltd v Makro Self
Service Wholesalers Ltd
(2001) : supply & installation of
shop fittings for stores are not
fixtures

CATEGORY (d)

Construction materials
Equipment
Labour

(1)

Herbert Construction Co Ltd v

Reinforcing Steel & Mesh Ltd (2013)
: fabrication of customised steel mesh
for specific construction project is
construction work

(2)

RA Pte Ltd v RB Company (2009) :

Claimant not registered with Singapore
CIDB but can recover payment for its
steel fabrication work

CATEGORY (e)
Bridge

Mechanical work

Viaduct

Dam

Reservoir

Water work

Cableway

Gas work *

Earthworks

Canal

Oil work *

Pipeline

Sewer

Aqueduct

Culvert

Drive

Shaft

Tunnel

Reclamation work

Whether constructed :

Telecommunication work

1.

(* include pipework)

Above or below ground

level

For Categories (a) to (e) for :

Petrochemical work *

2.

PROCUREMENT

Electrical work

Wholly or partly

CATEGORY (c)

Road

Structure

PREPARATORY/INTEGRAL/TEMP
ORARY WORKS

Aerodrome

ADJUDICABILITY

ADJUDICABLE (S 2 & 4 CIPAA)

CONSTRUCTION
CONTRACT
Includes :1. Construction work
contract

1. wholly or
2. p
partially
y

2. Construction
consultancy
contract

in Malaysia

Form : Made in
writing
iti
Precondition : valid
contract under
Malaysian Law

NOT ADJUDICABLE (S 3 & 40 CIPAA)

PARTIES
COVERED

TERRITORIAL
JURISDICTION
Construction work
carried out :

All construction
contracts in private
sector

1. Federal
Government

1. Sabah
2. Sarawak
3. West Malaysia

2. State
Government

EXEMPTED UNDER
SECTION 40

EXCLUDED UNDER
SECTION 3

Only to natural person i.e. an

individual and not a juristic person

By whom : Minister in charge of

Works

Small & simple contract for policy

consideration, processes in the Act is
technically demanding, & steps may
be overlooked & hence prejudiced

For construction work for any building

2 Forms :
S40(a) : any person/ class of
persons
[person = corporation and
natural person,
class of persons = persons
belonging to a particular
profession, trade or sector in the
construction industry]

All contracts in
public sector :

eg. Fabrication of
oil rig partly,
those in Malaysia
is covered
Includes :-

11

Not engineering infra works

Building to be less than 4 storeys

high, basements are considered
storeys (Mezzanine floor?)
floor?), no upper
bound to contract value, floor space
or height

Also include :
1. Government
Depts

Building must be wholly intended for

his occupation i.e. not for rent, lease,
sale, etc

2. GLCs

Occupation is an on-going
on going event
Westfields Construction Ltd v
Clive Lewis (2013)

Consultancy services by individuals

for his personal use & not for
commercial purpose

3. Statutory bodies

S40(b) : Any contract

contract, matter,
matter
transaction or any class

Extent :
1. From all provisions, or
2. From any provisions

Power exercised : upon

considering the recommendations
of KLRCA :
- Ministers power not unfettered,
must be reasonable
- Consultative process

Right : to prescribe terms and

conditions eg. Exemption for a
prescribed period of time or for
some government or national
policy

Mode : by order published in the

Gazette

Edenbooth Limited v CR8

Developments Limited (2008) : a
company cannot be a residential
occupier

3.0 MISCELLANEOUS ISSUES IN

STATUTORY ADJUDICATION

12

MISCELLANEOUS ISSUES IN
STATUTORY ADJUDICATION (SA)

COMMENCEMENT
OF SA

Governing Provision
Date : to be decided
by
M
Method
th d : b
by
notification in the
Gazette or .

CONTRACTING OUT
OF CIPAA
Any express
provision prohibiting
contracting out
Possible under the
Doctrine of
Freedom to
Contract ?
Appears not
possible
ibl if CIPAA is
i
construed as a
whole
Any other way ? By
seeking Ministers
Minister s
exemption

DESCRIPTION OF
PARTIES

Parties variously
described under
different stages of
adjudication
Stages involved :
1. During contract
payment stage
2 During adjudication
2.
stage
3. During enforcement
of Adjudicators
decision stage

MODES OF SERVICES OF
NOTICES AND
DOCUMENTS : UNDER SA
Governing Provision
Scope : Sets out the
procedures for the service
under the SA :
1. Notices; and
2. Other documents
Mandatoryy requirements

13

STAGE
1. During Contract Payment Stage

2. During Adjudication Stage

3. During Enforcement Stage

REMARKS

DESCRIPTION OF PARTIES
UNPAID PARTY

CLAIMANT

PLAINTIFF *
(Party in whose favour
adjudication decision
was made) **

S4

NON-PAYING PARTY

S4

RESPONDENT

DEFENDANT *
(Party against when
adjudication decision
was made) **

Terms used where

applications made to
H. Ct for either stay
(S16) or enforcement
(S28)

** For enforcement of
other remedies by
S29 and 30
Chart based on,
G Bayley
G.Bayley
Adjudication in New
Zealand

14

MODES OF SERVICES OF NOTICE

AND DOCUMENT (S38 CIPAA)

WHAT IS A
DOCUMENT ?

S38 : party iincludes

l d a
company

S350 Companies Act

1965 (CA1965) :
A document may be
served
d on a company
by leaving it at or
sending it by
registered post to the
registered office of the
Company
p y
S4 CA1965 :
document includes
summons, orders &
other legal process, &
notice or register.
Legal process to
include ejusdem
generis notices &
documents under
CIPAA.

PERSONAL
DELIVERY (S38(a))

1 P
1.
Personall d
delivery
li
2. To the party

Acknowledged by
the party, date &
time of service,,
name & signature
If signing is
refused, record
the
circumstances of
the situation

DELIVERY AT
PLACE OF
BUSINESS (S38(b))
1 L
1.
Leaving
i att partys
t
usual place of
business (i.e. the
company)
2. During partys
normal business
hours
Written
acknowledgment
attested with the
company stamp,
stamp
signatures &
name of person
receiving
documents on
behalf of the
intended recipient.

OTHER MEANS
(S38(d))

DELIVERY BY
POST (S38(c))

1 Sent by registered
1.
post

2. To partys usual or
last-known place
of business

Any other methods

agreed by parties eg.
fax, e-mail, etc

Also any of the modes

in (a), (b) & (c)
notwithstanding
t ith t di th
thatt
the contract provided
for a particular mode
of service

Agreement to be in
writing
writing

Most convenient
mode

Post office records

offer essentially
conclusive
evidence of
service

4.0 SCOPE OF SUBJECT MATTER

SCOPE OF SUBJECT MATTER

(Payment and Non-Payment Issues)

PAYMENT ISSUES

PROHIBITION OF
CONDITIONAL PAYMENT
(Pay when paid) (S35)

Prohibits all
conditional payments
terms in construction
contracts

15

NON-PAYMENT ISSUES

ADJUDICATION OF
PAYMENT DISPUTES
(Parts II to IV)

APPLICABLE PROVISION
(S b
(Sub-section
ti 27(2))

Main subject
matter of Act

Precondition : By
agreement
between parties

EXAMPLES OF ISSUES
DEFAULT PAYMENT
PROVISIONS (S36)
Default provisions
in the absence of
express terms of
payment in
construction
contracts

FORM AND TIMING

C
Claims
a s suc
such as :
1. Extra-contractual/ Common
Law
2. Ex-gratia
Non Payment Issues eg:
1. Extension of time and
damages
2. Liens
3. Technical issues
4. Site possession issues, etc

Nature : To extend
adjudicators
jurisdiction
Timing : Only after
adjudication
proceedings have
started

WHAT IS PAYMENT
WHAT IS INCLUDED

DEFINITION (S4)
Payment for :
1. Work done i.e.
construction work, or

Progress/Interim payments

Pa ments on Pen
Payments
Penultimate
ltimate and Final Certificates

Tiong Seng Contractors (Pte) Ltd v Chuan

Lim Construction Pte Ltd (2007) SGHC142
- Final claim from earthworks subcontract :
$481,156
- Main contractor paid S$210,554, balance
S$270,602
- Adjudication decision : S$182,542
- Main con took out OS to set aside decision.
The Act does not apply to final claims,
adjudicator no jurisdiction

2. Services rendered i.e.

consultancy service
Such payment only if :
1. The work done or
services rendered
2. Are stated as express
terms

(S36 : absence of
express terms of
payment)

EXCLUSION

Payment for varied work/changes

Payment for :

(a) Australia & New Zealand case laws uphold

claims for extended costs due to prolongation of
the contract period. These are costs which
inevitably arise from carrying out the work
work. It is not
necessary that every amount claimed in the
payment claim can be directly linked to a physical
task involved in the construction of the building or
structure. Cash flow was intended to be protected
by the Act & it is to be interpreted so as to achieve
its object of speeding up payments.
George Developments Ltd v Canam
Construction Ltd (2006), approving NSWs
decision of Quasar Constructions NSW Pty Ltd
v Demtech Pty Ltd (2004)
(b) UK Authorities
- Balfour Beatty Construction Ltd v London
Borough of Lambeth (2002)
- Try Construction Ltd v Eton Town House
Group Ltd (2003)
items for site preliminaries & site overheads are
claimable where the contract clearly envisages
such claims being made as part of the progress
claim process

2. Provisional Sums
3. Contingent Sums

2. Advance payment ; etc

Extra-Contractual/Common Law Payment claims eg :

1. Quantum Meruit
2. Under S71 Contracts Act 1950; etc

Claims founded on implied terms

Ex-gratia claims

Miscellaneous issues eg. abortive work, etc

Damages for breach of contract : Quasar Constructions

NSW Pty Ltd v Demtech Pty Ltd (2004)

Pre-condition : Must be
1. Expressly provided for in construction
contracts
2. Must fall within the scope of CIPAA

Loss and expense

Note :

1. Prime Cost (PC) Sums

4. Retention Sums, etc

Payment under express terms of construction contract but

not for actual work done/services rendered eg :
1.

H. Ct : progress payments include final

payments on a purposive construction of the
Act. It can only be excluded if expressly
provided in the Act

3. Under a construction
contract
Proviso : Unless the default
provisions
i i
off S36 apply
l

16

17

CONDITIONAL PAYMENT

APPLICATION AND
TYPES
Generally apply to :1. Sub-contractors eg.
Domestic, Nominated,
etc.
2. Consultants,
sub-consultant
3. Others e.g. Suppliers,
etc.
Type of clauses :1 P
1.
Pay if paid
id
2. Pay when Paid
3. Back to Back
Effect :
1. Cash flow risk
transferred to subcontractors, etc.
2. Generally, literally
construed by Courts

DEFINITION AND
FORMS UNDER S35(2)
2 Main Types :Type I S35(2)(a) where :1. The obligation of payer to
the payee
2. Is conditional on the payer
having received payment
from a 3rd party e.g.
principal
Type II S35(2)(b) where :1. The obligation of the payer
to pay the payee
2 Is conditional upon the :
2.
- availability of funds, or
- drawdown of the
payers financing
facilities

REASONS FOR S35

To :-

S35(1) :-

1. Curb the pervasive

unfair practices in
industry

1. Renders void any

conditional payment
provision
p

2. Improve the cash flow

risk amongst parties

2. In a construction contract

3. Improve cash flow

especially down the
supply line
4. Ensure that one-sided
contractual provisions
regarding payment are
not unilaterally imposed
and enforced
5. Ameliorate the effects of
economic duress in the
industry

PROHIBITION OF
CONDITIONAL PAYMENT
((Pay
Pay when paid
paid)) (S35)

EFFECTS OF S35

3. Such provision must be

in relation to payment
R
Reverses th
the currentt legal
l
l
position as decided in cases
such as :
1. Pernas Otis v YTL
2. Asiapools v IJM
Practical effect :
1. All such express clauses
in existing contracts void
and unenforceable
2. All such express clauses
will have to comply with
S35 to be effective
3. Default provisions of S36
is effected.

A (main contractor) pays B

(subcontractor) when 3rd party C
(employer) pays A :Firma C-trade v Newcastle
Protection & Indemnity (1990)

Cases :(1) Midland Expressway Ltd

v Carillion Construction
Ltd (No.2)(2005) :
employer is entitled to
be paid = employer is
paid , clauseis
clause is
paid
prohibited
(2) J B Leadbitter & Co. Ltd v
Hygrove Holdings Ltd
(2012) :
contractor was to be
paid sums due under the
contract only when
sufficient funds had been
paid by another party into
an escrow account
(3) F T Company v F U Pte
Ltd (2008) :
pay when paid clause
(4) O S Pte Ltd v O T
Pte Ltd (2009)
BUT a contract which
contains certain procedural
requirements which require
the Claimant to serve a
notice or take some steps
before a payment claim is
made is not repugnant

18

DEFAULT PROVISIONS IN ABSENCE OF TERMS OF

PAYMENT (S36)

MANNER OF VALUATION
OF AMOUNT TO BE PAID

SCOPE : S36(1)
Deals with default
provisions on terms of
payment in a
Construction Contract
C
Covers :
1. Construction Work
2. Consultancy Services

Default Provisions :
1. Shall be applicable
2 Unless otherwise
2.
agreed by parties
The only clause in
CIPAA where the term
progress payment is
found

PURSUANT TO
S36(1)

- Estimated reasonable cost,

does not require Respondent
to actually incur the cost, so
long as there is a basis for
making reasonable estimate
of the eventual quantum
- The diminution in value,
Respondent seeks a reduction
on the basis that it represents
a lower value

PURSUANT TO
S36(2)

S36(1) : right to progress

payment at a value calculated
by reference to :

1. Contract Price :
S36(1)(a) - %
completion of the
work
2. Any other rate specified in
the Contract : S36(1)(b)
3. Any variation agreed by the
parties for a adjustment of
1 and 2 above:
S36(1)(c) variation has
to be instructed per
contract terms
4. Diminution in value /
reasonable cost of
rectifying defect / nonconformance :
S36(1)(d)

Costofrectification

Setoffs&Counterclaim
Respondent
R
d t is
i entitled
titl d tto sett
offs in relation to defects &
counterclaims, not set-offs for
back charges or counterclaim
for liquidated damages

FREQUENCY OF PROGRESS
PAYMENTS S36(3)

S36(2) : consultancy
services, design & build
contracts
Used where matters in
S36(1)(a) to (d) are absent

By reference to :
1. Fees set by relevant
regulatory board :
S36(2)(a), or
2. In absence of 1,
f i reasonable
fair
bl
rates / prices prevailing in
the construction industry.
A claim for work to be
valued on a fair &
reasonable price has
to be sufficiently
particularised :
S36(2)(b)
3. fees for architects &
engineers can be
computed per statutory
scale of fees published by
the Board of Architects or
Board of Engineers

DUE DATE FOR PAYMENT

UNDER S36(4)

Governing provision :
S36(3)

Governing provision :
S36(4)

Timetable :
1. For Construction
Work : Monthly

Due date for Payment :

2. For Consultancy
Services: Monthly
3. For Supply
Contracts: Upon
delivery of Supply
Items

1 Within 30 calendar
1.
days
2. Time to run from date
of receipt of invoice

5.0 IMPACT ON CONSTRUCTION

INDUSTRY & CONTRACTING
PARTIES ON 3RD PARTIES &
PARTIES,
IMPACT OF CIPAA

IMPACT ON CONSTRUCTION INDUSTRY AND

CONTRACTING PARTIES

CONSTRUCTION
INDUSTRY

EMPLOYERS

Alter the payment

culture

Change attitude towards

payment issues

Permit a more even

allocation of payment
risks

Enforce a fairer
allocation of risks
despite dominant
position

Stop unfair and

pervasive practice of
constricting cash flow in
the supply line
Improve quality of work
and professionalism
f
Minimise payment
disputes from going to
arbitration, litigation, etc

Compel mandatory
payment of the amount
due to the contractor
with effective sanctions
Improve professional
f
and good governance in
administrating payments
Eradicate the delinquent
and recalcitrant
employers
Improve quality of work /
finished products

CONTRACTORS

Ameliorate the harsh

and pervasive risk
allocation imposed on
them by employers
Allow receipt of regular
and timely payment
Improve their cash-flow
Enable speedy
resolution of payment
disputes cheaply
through adjudication
Allow statutory
mandated recovery of
payment after
j
adjudication
As for employers in
regard to their
obligations to their subcontractors

SUBCONTRACTORS
CONTRACTORS,
ETC
Generally as for
contractors
Allow enforcement of
payment in the absence
of express provisions in
the sub-contract
Develop a healthy and
professional
body/corpus of
downstream
suppliers/subsuppliers/sub
contractors effectively
supporting the upstream
players/parties

19

20

IMPACT OF CIPAA ON THIRD PARTIES

CLAIMS
CONSULTANTS/
LAWYERS

CONSTRUCTION
PROFESSIONALS

Payment for consultancy

work undertaken :

1. Easier to receive; and

1. for adjudication support

work
2. to become adjudicators

2. In time
3. remedies for default
available through
CIPAA

2. Default Possible
claims in :
- Breach of contract
- Tort of Negligence

Necessity to get P.I.

insurance

Opportunity to :
1 Become adjudicators
1.
2. Do adjudication support
work

For lawyers :
1 New/increased
1.
opportunities
2. For consequential
litigation work eg.
Applications for stays,
enforcement, etc

For valuation and

certification role
1. Need to improve
professionalism and
good
d practice
ti

New/increased
opportunities :

Liability for default

possible claims for :
1. Breach of Contract
2. Tort of Negligence

COURTS

ADJUDICATORS

New work opportunities

Need to maintain
competency, integrity and
professionalism

Statutory immunity
against :

Need to be
educated/updated on the
philosophy,
hil
h
aims/objectives,
implementation, etc of
adjudication

Necessity to :

1 any action/suit
1.

1. recognise the
differences between
adjudication and other
ADR methods

2. provided acting in
good faith

2. give full effect to CIPAA

Must be prepared for an

increase in adjudication
generated litigation

IMPACT OF CIPAA : MISCELLANEOUS ISSUES

CONTRACT
DOCUMENTATION
Terms of all construction
contracts
1. Review and revised
2 To conform with CIPAA
2.
provisions
Terms that contradict/depart
from CIPAA to be
removed/revised eg ;

CONTRACT
ADMINISTRATION
Contract administration issues
that are affected by CIPAA are
mainly :
1.

Payment

2.

Variations

Necessity to ensure :

1. Conditional payment
terms

1. Claims are properly

reviewed, processed,
certified and honoured in
compliance with CIPAA

2. Restricting right to
adjudication

2. Proper record/documents are

generated and available

3. Pre-conditions to
adjudication, etc

3. Proper procedures are set

and followed to obviate
default

Terms of sub-contractors to
be aligned with those of
Main Contractor to conform
with provisions of CIPAA

Good contract administration

practices are adopted and
followed

21

MISCELLANEOUS
ISSUES
Owners compliance issues :
1. Availability of funds/cash-flow
2. Administration of payment
process
3. Awareness and compliance
with CIPAA
Miscellaneous
issues/challenges :
1. Adjudication of non-payment
issues
2. Adjudication
j
of complex
p
and
value wise sizeable disputes
3. Solvency of the parties
4. Possibility and effect of
evidence-ambush
evidence-ambush
5. Consolidation of adjudication
6. Problems of claimants acting
in consort
7. Attitude of the courts

6.0 PRINCIPAL COSTS

22

ADJUDICATION : PRINCIPAL COSTS

COSTS OF
ADJUDICATION
PROCEEDINGS
(S18 CIPAA)

2 categories :

COSTS OF
REFERENCE

1. Costs of
reference; and
2. Cost of
decision

Nature :

COSTS OF
DECISION

- Parties costs
involved in the
adjudication
proceedings

Types :
1. fees of lawyers/
representatives
2. fees of expert
witnesses,
advisors, etc
3. costs of meetings,
venue, transcription
(if any), etc
4. costs for the
preparation and
defence of the
claim
5. costs of
documentation,
investigation
expenses
6. administrative
costs
7. other incidental costs

Nature :
- Adjudicators fees
and costs (direct
and indirect costs)

Fees & expenses as

appointor &
administrator of the
matter

2. Indirect costs
fees/costs relating
to the appointment
of the Adjudicator
by 3rd party
or NB (A
Nominating Body)

The adjudicator :
1. shall order the
costs to follow the
event (no
discretion), and

T
Types
:
1. Direct costs fees
and
expenses of the
Adjudicator

OTHER
JURISDICATION

MISCELLANEOUS
(S18(1)

KLRCA

2. fix the quantum of

costs to be paid
(has discretion)

Effect :
1. Adjudicator has no
discretion
2. So long as the
party is
successful, it can
recover the costs

S18(2) renders any

prior agreement
between the parties as
to the issue of costs
that is inconsistent
with S18(1), void

SOPA
(Singapore)
Adjudicator has
power to
determine which
party
t shall
h ll pay
cost of the
adjudication &
the amount of
contribution by
each p
party.
y The
cost of
adjudication is
limited to
adjudication
application fee &
the adjudicator
adjudicators
s
fee. No
provision to
award the
successful party
his costs (same
as NSW)
S )

23

TYPE OF DISPUTE

QUANTUM
INVOLVED

ADJUDICATORS
FEES ARE
DETERMINED BY

COMPLEXITY OF
THE DISPUTE

ABILITY AND
EXPERIENCE OF THE
ADJUDICATOR

3RD PARTY
SPECIALIST INPUT

ADJUDICATORS FEES AND EXPENSES

(S19 CIPAA)

AGREEMENT ON
FEES

APPOINTMENT
BY PARTIES

APPOINTMENT
BY KLRCA
DIRECTOR

S19(1) : Parties
and Adjudicator
free to agree

KLRCAs
standard fees
shall apply

Failure to agree :
S19(2) applies
i.e. KLRCAs
standard fees
shall apply

See S23(2) and

32(b)

PARTIES LIABILITY
FOR THE FEES

ENTITLEMENT TO
FEES OR EXPENSES

ADVANCE SECURITY

Parties liable under

S19(3) i.e. Jointly
and Severally

S19(4) : A mandatory
(see use of word
shall).

Release of
adjudication decision
subject to S19(5) i.e.
contingent on full
full
payment of fees and
expenses to be
deposited with
Director of KLRCA

The quantum & timing

to be directed :
established by the
adjudicator

Adj
Adjudicator
di t may h
have
a lien over his
decision

24

Entitled only upon delivering

the decision within the time
period stated in S12(2)

Failure to deliver : S19(6)

Adjudicator not entitled to fees

or expenses

Exception
p
:
1. When delay in delivery
of decision due to
failure of parties to
comply with S19(5) i.e.
deposit full payment
with KLRCA
KLRCA, or

Amount
1. reasonable
proportion of total
fees

2. Where legally
challenged and struck
down by courts

2. in equal shares
3. to be deposited to
Director of KLRCA

Q : if the adjudicator produces

an unenforceable decision,, is
he entitled to his fees ?
PC Harrington Contractors
Ltd v Systech International
Ltd (2012)
- the conduct of the
proceedings was below the
standards which are required
to enable the decision to be
enforced. Adjudicator not
entitled to his fees.

7.0 RIGHT TO ADJUDICATE

ADJUDICATION OF PAYMENT DISPUTES :

RIGHT TO ADJUDICATE

WHO HAS THE

RIGHT ?
Only an unpaid
party (S4 CIPAA)
- party who claims
payment of a sum
- which has not been
paid
- wholly
h ll or partly
tl
- under a construction
contract

DEFAULT IN
PAYMENT

PRE CONDITIONS
PRE-CONDITIONS
Construction contract
under CIPAA must
be valid
Non-paying party
fails to pay by due
date
Such default is for
either whole or part
of amount claimed
Provided limitation
has not set in

Occurs where either :

25

DUE DATE FOR

PAYEMNT

- whole amount claimed

Not defined
expressly in CIPAA

- part off amount claimed

l i d
is not paid by due
date

To be decided by
necessary
implication

No payment certificate
was issued per contract,
th amountt which
the
hi h th
the
contractor considers
should have been certified
had the certificate been
promptly issued

Depends on 2
circumstances

PRESENCE OF
EXPRESS
DATE/PERIOD FOR
PAYMENT IN
CONSTRUCTION
CONTRACT

ABSENCE OF EXPRESS
DATE/PERIOD FOR
PAYMENT IN
CONSTRUCTION
CONTRACT

Eg. CI30.1 PAM

Contract 2006,
CI28 6 JKR Form
CI28.6
203 & 203A

Default
provisions of S36
CIPAA applicable
i.e. S36(3) and
36(4)

26

STAGE1

PRELIMINARY
STAGE

STAGE2

INITIATIONOF
ADJUDICATION
STAGE

STAGE3

APPOINTMENT
OF
ADJUDICATOR
STAGE

S5 to 7

S7 and 8

S21 to 23

sub stages :
3 sub-stages

sub stages :
2 sub-stages

sub stages :
2 sub-stages

- making of
payment claim
- payment
p
to claim
response
- decision of
unpaid party

- decision to
initiate
adjudication
- which has not
been paid
- initiation of
adjudication
process

- selection of
adjudicator
- appointment of
j
adjudicator

STAGE4

CONDUCTOF
ADJUDICATION
PROCEEDINGS
STAGE

S9-12, 14, 17,

19, 20 & 24-27
3 sub-stages :
- commencement
of adjudication
proceedings
- submissions
- determination

STAGE5

POSTDECISION
STAGE

Part IV, S15-17

3 sub-stages :
- post publication
of decision
- enforcement of
decision
- enforcement of
other remedies

27

MAKING OF CLAIM
GOVERNING
PROVISION

S5 : Payment Claim
consisting
of :-

Discretionary up to
Unpaid Party

Must be within
Li it ti P
Limitation
Period
i d
(Limitation Act/
ordinance)

- S5(1)
- S5(2)

Unpaid Party may

serve payment claim on
o
ay g pa
party
ty
Non-Paying

Use of word may

makes it
discretionary

S5(2) : In Writing

S5(2)

Term not defined

Reference to case
law/ authorities for
elucidation

Use of shall
connotes
mandatory
d t
requirement

Use of word shall

connotes mandatory
requirement

Detailed
requirements :

Ultimately up to
unpaid Party

Amount claimed
- broad basis of the
computation in support
of the amount claimed
eg. quantity & rates if
lump sum (%
completed)
- to include payment
certificate

Due date for payment (a

period from date of
presentation of a
payment certificate or
from date of issue of a
cert.) This is the date
when the entitlement to
be paid arises

S5(2)(b)

Identify cause of
action moneyy not
paid on due date
Stipulate contract
provision under which
made
(a) Date of contract &
brief work
description/project
title
(b) Clauses on
payment
(c) Clauses on
entitlement of
payment on due
date

Defines the
jurisdiction of the
Adjudicator

Describe the work

or service ((any
y
stage completion
payment?)
To which
payment relates

S38

4 main forms
as S38(a) to
(d)

S5(2)(d)

S5(2)(c)

MODE OF
SERVICE

EFFECT

S5(2)(a)

CONTENTS
OF PAYMENT
CLAIM

FORM OF
PAYMENT
CLAIM

TIMING OF
SERVING

NATURE

Statement that Payment Claim

is made under CIPAA 2012

(a) Australia Position

- alerts the party receiving the
payment claim to the
possibility that adjudication
proceedings may be
triggered in the event that the
payment claim is not settled :
Leighton Contractors Pty
Ltd v Campbelltown
Catholic Club Ltd (2003)
(b) Singapore
No need to declare : Sungdo
Engineering & Construction
(S) Pte
Pt Ltd v Italcor
It l
Pt Ltd
Pte
(2010) & also in Lee Wee Lick
Terence v Chua Say Eng
(2012)

RESPONSE TO CLAIM

S6 : Payment Response
is a statement of the
non-paying (NP) party
made in response to a
payment claim issued by
the unpaid party. If there
is a set-off for defects,
NP must assert
otherwise this would
effectively preclude the
adjudicator to consider
this defence in the
subsequent
proceedings. Adjudicator
has
as no
o po
power
e to a
allow
o
correction because both
payment claim &
response are served
before appointment.

NON-PAYING
PARTYS
OPTION

TIME TO
RESPOND

GOVERNING
PROVISION

S6(3) :

Within 10 working days

Date from which time

counted : From receipt
of Payment Claim

Mandatory requirement

If NP party fails to
respond :-

S6(2) : In
In Writing
Writing

- deemed to have
disputed entire
payment
p
y
claim
- Unpaid Party
(UP) can proceed
to next stage

Presumably a mandatory requirement

Term not defined

Reference to case law/authorities for elucidation

S6(1)

Person responding
p
g=
Non-Paying Party (NP
Party)

Serve Payment
Payment Response
Response
on UP within 10 working
days

Pre-condition : Receipt
of Payment Claim from
Unpaid Party under S5

Either pay :
- whole amount claimed, or
- any amount as admitted

Admission may not

necessarily bind the NP
party in any potential
arbitration or trial

Payment together with

payment response ?
No, it is taken that NP
accepts liability. Payment of
amount claimed is a
separate process

Defines jurisdiction of
Adjudicator

DISPUTE AMOUNT CLAIM

ADMIT PAYMENT CLAIM

4 sub-sections

MANNER OF
SERVICE

EFFECT

FORM OF
PAYMENT
RESPONSE

- Must be strictly adhered to : J L Pte Ltd v JM

Pte Ltd (2009) : Respondent argues writing
suggested the medium must allow itself to be
immediately readable & that DVD did not qualify
because it required both computer hardware &
software before it could be read. Adjudicator
di i
dismissed
d contention.
t ti
W
Writing
iti iis extended
t d d tto
submission in any mode which can be reasonably
accessed through a computer

- S6(4)

28

S38

4 main types
S38(a) to (d)

NO ACTION

S6(2)

S6(4)

Either whollyy or p
partly
y

Serve Payment Response on UP

within 10 working days

Upon
p expiry
p y of 10 working
g days
y p
per
S6(3) from receipt of payment
claim

Contents of Response :
- amount disputed to show in broad
computational basis
- reason for dispute
p
(eg. Furnishing proof of payment
set-offs, counterclaims due to
contractors delay or defects)

Deemed to have disputed the

entire Payment Claim

Dispute is crystallised, UP can

proceed to next stage
p
g

Halki Shipping Corporation v

Sopex Oils Ltd (1998) :
There is a dispute once money is
claimed unless & until the
defendants admit that the sum is
due & payable

Orange EBS Ltd v ABB Ltd

(2003)

Late response :- a nullity

- no payment response to define
adjudicators jurisdiction S26(2) :
adjudicator can proceed at NP
or Respondents disadvantage as
there are no defences

DECISION OF UNPAID PARTY

WHEN TO
DECIDE ?

After 10 working
days
y : S6(3)
( )
Decision before this
will be premature
and invalid

PRE
PRECONDITIONS
Non-paying party
serves payment
response of
admitted amount
only (S6(1))
Non-paying party
disputing
p
g amount
claimed wholly/
partly (S6(2))
Non-paying party
fails to respond
(S6(4))

UNPAID
PARTYS
OPTIONS

NATURE OF
DECISION TO
INITIATE
ADJUDICATION

29

TIME BARS/
LIMITATIONS

Give up claim

S7(1)

S7(3)

Negotiate
Negotiate, mediate
or settle claim

Discretionary : The
use of word May
indicates
Discretionary

6 years from the date

of crystallisation of the
dispute (the Long Stop)

Reject Non-paying
partys decision/
rejection/ inaction :
crystallises
t lli
a
Payment Dispute

Unpaid Party to
d id
decide

Within relevant period

of limitation under :
- Limitation Act
1953 (West Malaysia)

Make decision how

to resolve Payment
Dispute

- Sabah Limitation
Ordinance [Cap 72]
- Sarawak Limitation
Ordinance [Cap 49]

INITIATE
ADJUDICATION
Right under S7
CIPAA
Provided by
Statute

COMMENCE
ARBITRATION

COURT ACTION

Amount claimed

Under S37

Due date for

paymentt

Can proceed
concurrently
tl

Otherwise it is timebarred

30

DECISION TO INITIATE ADJUDICATION

GOVERNING
PROVISION

WHO CAN INITIATE ?

S7(1)

S7(1)

Provides
P id th
thatt :

Either
Eith :

- Dispute must arise

from a Payment
Claim made under
S5
- May be referred to
adjudication

Example
Payment claim : RM1
million
Payment response :
disputed amount is
RM400K
Di
Dispute
t is
i confined
fi d tto
RM400K & not RM1
million

- Unpaid Party
- Non-Paying Party

Depends on the nature of

the Dispute
Both Parties have equal
right of reference
How can an employer
(owner) as a non-paying
party recover in his position
as a claimant :- confined to back charges,
materials supplied, defect
rectification work
- counterclaim for LD,
diminution in value of
works on a/c of defects are
defence to a claim. They
are not a premise for
affording a claim as they
are not payment

SUBJECT MATTER

Onlyy if a dispute
p
exists
The dispute must
arise from a
Payment Claim
under
u
de S5
Only 1 dispute to be
adjudicated at a
time (based on res
judicata)

RIGHT TO REFER
DISPUTE TO
ADJUDICATION

S7(2)
( )
Right exercisable
after 10 working
days to serve
payment response
B
Butt within
ithi relevant
l
t
Limitation period
Otherwise it is not
valid

31

INITIATION OF ADJUDICATION

S8(1)

WHEN TO
INITIATE

WHO CAN
INITIATE ?

GOVERNING
PROVISION

REPRESENTATION
S8(3)

PROCESS
COMPLETED

NOTICE OF
ADJUDICATION

S8(1)
( )

Up to Claimant

S8(1)

S8(2)
( )

Either :

Within relevant
limitation period

Otherwise it is timebarred

By Claimant serving
Notice of
adjudication on
Respondent

Alert Respondent to
commence
preparation of his
case, that is natural
justice to be afforded
- Brodyn Pty Ltd v
Davenport (2004)

When the
Respondent
receives the
Notice of
Adjudication

Counsel not
required, can be
claim consultant &
construction
professional (QS)

Counsel for
complex & large
quantum claim

Eg. S$116 million :Claimant :

3 Lawyers, 6 Senior
corporate personnel

- Unpaid Party or
- Non-Paying
party

PROCEDURE

Parties are known

as :- Party initiating
Claimant
- Opposing Party
R
Respondent
d t

Chase Oyster
y
Bar Pty
y
Ltd v Hamo Industries
Pty Ltd (2010) :
Claimant failed to serve
adjudication notice
within 20-day period per
NSW SOPA1999.
Proceeded with
Adjudication application.
Adjudicator appointed,
decision in his favour.
Hd : Invalid because
adjudication notice is
j i di ti
jurisdictional.
l Notice
N ti outt
of time & hence not
valid.
Also, Steel v Beks :
Claimant sent claim
details to wrong fax
number .
Hd : Respondent did not
receive payment claims
or adjudication notice
(no service). The
subsequent adjudication
application
li ti and
d
determination are invalid

Refer next slide

An adjudicator
can then be
appointed as in
S21

Respondent :
6 Lawyers, 6 Senior
corporate personnel
& consultants

32

NOTICE OF
ADJUDICATION

FORM

MODE OF SERVICE

S8(1)

S38

Written form

does not
expressly state
to be signed

4 modes (S38(a) to
(d))

good practice to
do so

CONTENTS OF NOTICE

STATUS OF NOTICE

State service is pursuant

to S8(1)
- nature of dispute :
(i) identify payment
claim & response,
response
eg. dates of
documents
(ii) assert dispute is
crystallised
- description of dispute :
specify amount
Claimant considers to
be in dispute
- remedy sought :
(a) state amount
Claimant seeks to
recover
(b) outline reasons for
rejecting the whole
or part of the
counterclaim, set-off
or defence
- any supporting
document to enable
Respondent to know
the gravity of the case
against him (unlikely to
annex full contract
documents, useful to
tabulate heads of claim,
quantum claimed)

Defines the
arbitrators
jurisdiction
Watkin Jones &
Son Ltd v Lidl UK
GmbH

PURPOSE OF NOTICE

To inform Respondent :
- of nature of dispute
- of case against him

To define remedy/
remedies sought

To inform Appointing
Authority to appoint a
suitable adjudicator

8 0 APPOINTMENT OF
8.0
ADJUDICATOR

MANNER OF APPOINTMENT OF ADJUDICATOR

METHODS OF
S
SELECTION
C O

PRECONDITIONS

S8(1) and (2) complied

- receipt by
Respondent
p
of valid
Notice of
Adjudication from
Claimant

Mandatory
requirements

2 valid methods :

Discretion given to
parties to exercise either
option

GOVERNING
PROVISION
S21(b)

PRE
PREREQUISITE
Upon written
request by :
-e
either
t e pa
party
ty
S21(b)(i)

WHEN TO
APPOINT ?
Within 5
working days of
receipt of
written request
(S23(1))

- both parties
S21(b)(ii)

GOVERNING
PROVISION
S21(a)

PRE-REQUISITE
Need parties
agreement
agreement in
writing

PROCEDURE
Either party may
propose
p
p
suitable
candidates to other to
select from
Claimant to initiate

PROHIBITION
Against pre-agreed or
named :
- Adjudicator (dominant
party cannot compel the
other party to accept a
candidate ahead of any
dispute arising)
- Appointing Authority
(other than KLRCA)

GENERAL
SELECTION
CRITERIA

BY DIRECTOR
O KLRCA
OF
C

BY THE
PARTIES

- by the parties
(S21(a))
- Director of KLRCA
(S21(b))

33

Freedom to appoint,
should not limit to
institutional list

May be set by the parties and/or

Director of KLRCA

Need to :
- be suitably qualified
- willing and able to take
up appointment
- declare as per requirements
of S24 : Duties and obligations
of the adjudicator

A il bl ((no good
Available
d if h
he iis hi
highly
hl
experienced but his calendar is
congested)

Agree to terms and fees

WHEN ?
Agreement must be
made after reference
to adjudication
Must be completed
within 10 working
days from receipt of
Notice of
Adjudication by
Claimant or
Respondent

EFFECT OF
DEFAULT
Claimant may abandon
claim
Either party can request
Director of KLRCA to
select and appoint
(S21(b)(i))
Both parties can request
Director of KLRCA to
select and appoint
(S21(b)(ii)), need not
wait for expiry of 10
working days under
S21(a)

34

THE ADJUDICATOR

ELIGIBILITY
CRITERIA/
COMPETENCY
STANDARDS

GOVERNING
PROVISIONS

S4 (Interpretation)

S24, 25, 26, 27 &

34 : Duties &
Obligations,
Powers,
Jurisdiction,
Immunity, etc

DEFINITION OF
ADJUDICATOR

S4

Must be :
- an individual/
natural
t l person
- Not an artificial
person eg. a
company, etc.

Depends on the
appointer :

- if Director of
KLRCA set by
KLRCA (S32(a))

Very wide

No power to
decide own
jurisdiction/
KompetenzKompetenz
Kompetenz
principle
inapplicable (not
found in S27)

- if parties set by
them

POWERS OF
ADJUDICATOR

General
requirements :
- suitably qualified
- experienced
- able and willing
- meet duties and
obligations
under S24
- must ensure
confidentiality
(S25)
- available

Defined mainly by
S25 & 26

JURISDICTION OF
ADJUDICATOR

IMMUNITY

S34(1) :

- cannot be sued
for any act/
omission
provided done in
good faith

S 27(1) :
Limited to matter referred to
adjudication by parties :- under S5 : payment claim
and
- under S6 : payment response

S34(2)
( ):

- cannot be
compelled to
give evidence in
any subsequent
arbitration/ court
proceedings

S27(2) :
- jurisdiction can be extended
- to any other matter
- by written agreement
between parties
- at any time

S27(3) :
- adjudicator can opt to
proceed notwithstanding a
jurisdiction challenge
- and complete adjudication
- subject to parties right :
1. to set aside decision
under S15 or,
2. oppose application for
enforcement under S28

35

APPOINTMENT OF ADJUDICATOR

GOVERNING
PROVISIONS

S21 to 24

Selection either :

- by parties
(S21(a)), or

S21 and 24

NOTIFICATION OF
ADJUDICATOR
SELECTED
(agreed by parties)

PROCEDURE
(S22)

3 steps :

S22(1) :

- notification of
adjudicator

- by whom :
Claimant

- negotiation of
terms and
fees

- Form : in
writing

- acceptance of
appointment
by adjudicator

- requirement :
provide a
copy of
Notice of
Adjudication
to the
adjudicator

2 main methods :
- by parties : S22, or
- by Director of
KLRCA : S23

- by Director of
KLRCA (S21(b))

GOVERNING
PROVISION

APPOINTMENT BY
THE PARTIES

METHODS OF
APPOINTMENT

PRE-CONDITIONS
PRE
CONDITIONS

NEGOTIATION
OF FEES AND
TERMS

S22(2) :

OPTIONS
AVAILABLE TO
NOMINEE

- adjudicator to
propose &
negotiate with
the parties
- time period :
within 10
working
days from
receipt of notice
Note : The parties
would have
satisfied
themselves with
adjudicators
terms & fees
b f
before
notification,
tifi ti
otherwise it would
be embarrassing if
agreement cannot
be reached on the
terms & fees.

3 options :

- accept
appointment
- reject
appointment
Time limit : 10
working days
(S22(2))

Note : Adjudicator
needs to do
conflict check &
ensure
availability, all
within 10 days

Form :
presumably in
writing

Recipients :
Claimant and
Respondent.

Content :
together with
declaration of
S24

- fail to respond

CONSEQUENCES
OF REJECTION/
FAILURE TO
RESPOND

ACCEPTANCE
OF
APPOINTMENT

S22(3)

Options :
Discretionary :
- Claimant
might
abandon
claim, or
- Parties may
proceed to
select
l t and
d
appoint
another
adjudicator
(S21) or either
party to request
KLRCA to
appoint
i t
(S21(b)(i) or (ii))

9.0 COMMENCEMENT OF
PROCEEDINGS

COMMENCEMENT OF PROCEEDINGS

FORMALISATION OF
ADJUDICATORS
AGREEMENTS

GOVERNING
PROVISIONS
S21 : Appointment of
adjudicator & decision

Calling of Preliminary
Meeting

S22 : Appointment of
adjudicator by parties

Video conference
with parties

S23 : Appointment of
adjudicator by
KLRCA Director

S24 : Duties &

obligations of the
adjudicator

S25 : Powers of the

adjudicator

- by parties : S22(2)
Must be a valid notice under
S22(2)/ 23(2) and S38 (service of
notices and documents)
complete with declaration of S24

Preferably before service of

Adjudication claim in S9

Normally, latest at Preliminary

Meeting/ Conference

WHEN ?

GOVERNING PROVISION
S25(f) : call for meetings with the
parties

After expiry of 10 Working days

period stated in
- S22(2) or
- S23(2)

- Director of KLRCA : S23(2)

WHEN ?

Receipt of Adjudicators Notice of

Acceptance

PRELIMINARY
MEETING/
CONFERENCE

FIRST STEP

PRE-CONDITION

36

FORM AND CONTENTS

In Writing
Contents :
- for
f KLRCA appointment
i t
t : will
ill b
be
KLRCAs Standard Terms and
Conditions
- for party appointed : as negotiated

PARTICIPANTS

PURPOSE

After appointment under

S22 or 23

To sort out Agreement if still outstanding

Adjudicator : chair

To clarify points relevant to appointment

Preferably before service

of Adjudication Claim
under S9

To explain adjudication process

Claimant and
representatives

To set time table for submissions

To establish procedural matters

Respondent and
representatives

To hear procedural submissions & discovery

To g
give direction to p
parties experts
p
on meeting
g & jjoint
statements

To be briefed on the main points in the submissions

To clarify, agree and establish any other matters

relevant to proceedings and permitted especially under
S25

ADJUDICATION CLAIM

GOVERNING
PROVISION

S9 : Adjudication
Claim

S9(1) & (2) : in writing

Principally :
- Nature & description of dispute
- Remedy sought
- Any supporting document

S9(1) :
Onus is on
Claimant to ensure
service (Steel v
Beks (2010))

PARTIES SERVED

CHARACTERISTICS

Similar and consistent with Notice of

Adjudication in S8(1)

Cannot raise new issues not previously

raised in payment claim otherwise
jurisdiction exceeded (S27(1)) : Jurisdiction
of Adjudicator

MODE OF SERVICE

Must establish nexus

between cause and
effect

Must inform Respondent

on the case he has to
answer/defend

Burden of Proof (to Civil

Standard) on Claimant
throughout

Must not lead/include

any Evidence Ambush

Time & cost constraint

PARTY INVOLVED

FORMAT AND
CONTENTS OF
APPLICATION

SERVICE OF
ADJUDICATION
CLAIM

37

S38

4 Modes : S38(a) to
(d)

Format not stated, left to Claimant

WHEN ?

Original
g
to Respondent
p
:
S9(1)

Within 10 Working
Working
days

Copy to Adjudicator :
S9(2)

Of receipt of
adjudicators
acceptance of
appointment under :
- S22(2)
- S23(2)

Short hearing

Deals with key issue only

Bundles of documents are

important as documentary
evidence.
London & Amsterdam
Properties Ltd v
Waterman Properties Ltd
(2004)
- Referral Notice > 1000
pages

Some > 90 arch lever files

IF SERVICE IS LATE

Appears not to be fatal

Claimant can apply to

adjudicator with reasons

Adjudicator can extend

time S25(p) as
reasonably required but
this should not cause
undue prejudice to the
Respondent

SUPPORTING DOCUMENTS

TIME & COST

CONSTRAINT

DOCUMENTS

(1) -

identify the contract

date contract made
parties to the contract
claimant & respondent
p
if a subcontract, the principal & employer

(2) Is it a main contract or sub-contract ?

- description of work
- principal document forming the contract
- whether the subject contract falls within
definition of a construction contract under
CIPAA
(3) - Annex notice of adjudication
- proof of service or receipt to show proceeding
have been properly initiated
((4)) - extract of the terms or conditions of contract
relevant to the dispute
(5) Topical arrangement of documents : eg. separate
volume for
(a) calculation & data
(b) parties correspondence chronologically
(c) meeting minutes
(d) invoices & receipts

QUANTITY OF DOCUMENTS
& SUBMISSION

Short hearing

Ct. accepted tribunal to limit length

of submission & volume of
documents

RELEVANT TERMS OF
CONTRACT

Exception :
- complex
l
- enormous quantum

However, there must not be any

breach of natural justice

Organised in such a way

allowing tribunal to locate
relevant matters efficiently :-

DOCUMENTS SETTING OUT

CONTRACT PARTICULARS

38

contractual ground for

(a) payment claim,
(b) payment response in resisting
claim

Terms :(a) lump sum or measurement contract

(b) terms allowing for recovery of site
O/H & preliminaries, other cost &
expense
(c) method of valuation of workdone, or
goods supplied
(d) applicable rates & prices
(e) terms regulating :back charges,
set-offs,
abatement, etc

39

ADJUDICATION RESPONSE

GOVERNING
PROVISION
S10 :
Adjudication
Response

PARTY
INVOLVED

NATURE

If Respondent fails to
serve adjudication
response :

TIME FOR
RESPONDENT TO
MAKE DECISION

RESPONDENTS
OPTIONS

S10(1) : The
Respondent

S10(1) :
within 10 working
days from receipt
of Adjudication
Claim under
S9(1) from
Claimant

- S10(3) applies
- Claimant may
proceed with
adjudication

Unless Adjudicator has

extended time vide
S25(p)

RESPOND TO
CLAIM
Provisions of
S10(1) to (3)
apply

KEEP QUIET/ FAIL

TO RESPOND

Respondent may
apply to
Adjudicator to
extend times
S25(p)

2 situations :
- fail to respond at all, or
- fail to respond within 10
working days stated in
S10(1)

Effect :
- S10(3) applies
- Claimant may proceed with
adjudication
- Unless Adjudicator has
extended time vide S25(p)

CONSEQUENCE OF
DEFAULT TO MEET
TIME DEADLINES

2 scenarios :
- original 10
working
g days
y
period under
S10(1); or
- any extended
time under S25(p)
2 consequences :
- S10(3) : Claimant
may proceed with
adjudication
- S26 : Power of
adjudicator not
affected by
Respondents
non-compliance
- Adjudicator
j
may
y
draw an adverse
inference and
based on the
Adjudication
Claim

40

ADJUDICATION RESPONSE (AR)

PARTIES
SERVED
S10(1) :
Claimant is
served
original AR
Copy to
Adjudicator
(S10(2))

MODE OF
SERVICE

WHEN

S10(2) : within 10
working days of receipt
of Adjudication Claim
under S10(1)

FORMAT

S38

Not stipulated

4 methods
(S38(a) to (d)

Left to the
Respondent

CONTENTS

S10(1) :
Answer to Adjudication Claim with any supporting document

Answer to Adjudication Claim may comprise :

- jurisdictional issues/ challenges
- permitted set-offs, abatements, etc (note : not counter-claim)
- counter-claims giving rise to permitted set-offs etc

Documents may comprise :

- invoices
- measurement records
- site records
- daywork records, etc
Cannot raise new issues/ matters not previously raised

NOTE :
Respondent to respond to each allegation of fact & liability

Eg (a) V.O.
Eg.
VO
is the V.O. disputed or admitted ?
If admitted extent of any residual liability for payment
(b) Claimant put forth argument on certain supposed facts
Whether this is disputed or agreed ?
If agreed,
g
extent of agreement
g

Payment amount
Respondent alleges Claimant not entitled or Respondent accept whole or part of the
claim but sum payable is reduced by counterclaim, or set-off (eg. Defects, materials &
resources supplied, advance payments)

LIMITATIONS/
RESTRICTIONS

Respondent is prohibited from :

- raising a defence of
1. set off
ff
2. abatement
3. counter claim that gives
rise to a set-off
that had not been raised
previously in the :
1. payment claim (if the
Respondent is the payee)
2. payment response (if the
Respondent is the payer)
before the dispute was
referred to adjudication
- Except : unless the parties
agree expressly i.e. can be
consolidated (S14)
- must not lead/include any
Evidence Ambush
Limitations/Restrictions are
strictly enforced

41

ADJUDICATION REPLY

PARTIES
SERVED
S11(1) :
Claimant
serves
original reply
to
Respondent
and copy to
Adjudicator
with any
supporting
document
(S11(2))
Unique only
to CIPAA
CIPAA, not
found in UK
or Singapore

WHEN

S11(1) : within 5
working days of receipt
of Adjudication
Response under
S10(1)

MODE OF
SERVICE

FORMAT

S38

Not stipulated

4 methods
(S38(a) to (d)

Left to the
Claimant

CONTENTS

EFFECT
Effect of exercise of
both options i.e.
- to reply as S11

S11(1) :
- reply to Adjudication
Response
p
- any supporting document
Reply to Adjudication
Response may comprise :
- rebuttals
- denials
d i l
- admissions
- challenges
- answers, etc
to issues/matters raised
Documents to include only
documents that support and
constitute part of the reply
Cannot raise new
aspects/issues not
previously raised or stated in
the claim

- to keep quiet/fail to
reply
are two-folded :
- signifies the end of
the Submissions
- signifies the
beginning of the
next stage i.e.
Determination
Determination
Sub-stage
If Claimant does not
serve a reply, it
cannot be assumed
th t the
that
th Claimant
Cl i
t
concedes to the
points raised in the
adjudication response

DETERMINATION STAGE CONDUCT OF

ADJUDICATION PROCEEDINGS

APPLICABLE
PROVISIONS
S20

S24
S25
S

S26
S27

PRECONDITIONS
No jurisdiction
issues
In the event of
jurisdictional
challenge,
Adjudicator may
decide to proceed :
S27(3)

No grant of a stay
of adjudication by
High Court

Satisfactory
completion of the
earlier stages i.e.
Submissions stage

CONDUCT OF
PROCEEDINGS

Governing Provision
S12(1)

He can conduct
adjudication :-

- in the manner
he considers
appropriate
- within the powers
given to him under
S25
Very wide power but
statutorily defined by
:
- S24 : Duties
and Obligations
- S25 : Powers
- Others : S20,
26, 27 etc

IMPORTANT
CONSIDERATIONS

MANNER

By the Adjudicator
who is the master of
the proceeding

As decided by
Adjudicator but subject
to statutory limitations
Usual practice,
involving adversarially
and inquisitorially
S25 :
He has power to :
- call for meetings
- order interrogatories
to be answered
- use his specialist
skills and expertise
- carry out
inspections, etc
But needs to comply
with S24 especially :
- rules of natural
j ti ii.e. against
justice
i t
bias and procedural
fairness
- ensure
independence,
impartialit etc
impartiality

42

Must :
- ensure confidentiality
(S20)
- not exceed
d hi
his
jurisdiction at all times
(S26 & 27)

Must :
- allow parties to be
personally represented
or by third party
(S12(3))
- that Evidence Act 1950
is not strictly adhered
to
- act in
i good
d ffaith
i h at allll
times
- ensure his continuing
duty under S24
throughout the
proceedings :
(a) no conflict of
interest
(b) impartially, timely &
avoid unnecessary
expense
( ) comply
(c)
l with
i h NJ
(d) independent &
impartial

PARTICULAR
ISSUES

Effect of :
- S14 : Consolidation
of adjudication
proceedings
di
- S17 : Withdrawal &
recommencement
of adjudication
proceedings
- S26 : power of
adjudicator not
affected by noncompliances
- S37 : Relationship
between
adjudication
dj di ti and
d
other dispute
resolution process

10.0 JURISDICTION &

JURISDICTIONAL
CHALLENGES

JURISDICTION: AN INTRODUCTION (I)

SOURCES/LIMITS TO
JURISDICTION

DEFINITION

No definition in CIPAA

Riches and Dancaster

definition :- The word jurisdiction;
jurisdiction; is
used to describe the
nature and extent of the
adjudicators task
- Jurisdiction is the
authority granted to a
person so that he can
exercise justice in respect
of matters brought before
him

Definition in :
Chip Hup Hup Kee
Construction Pte Ltd v
Ssangyong Engineering &
Construction Co. Ltd
(2009)
- Competence of a tribunal
to hear a matter

Three Main Categories

- Statutory;
- By Agreement;
- By Law
Statutory: Provisions found under
the applicable Act e.g. S27
CIPAA
By Agreement: Between the
parties to confer/limit
f /
jurisdiction
of tribunal (adjudicator)
By Law: Established by the
Courts based on the facts and
circumstances

43

EFFECTS OF BREACHES
OF JURISDICTION
Two situations envisaged:
- Where adjudicator has no
jurisdiction in the first place
- Where the adjudicator
exceeds the limit or extent of
his jurisdiction
General effects:
- For the 1st scenario:
1. The Adjudication Decision is
invalid, non-binding and
unenforceable

Si
Simmonds
d definition
d fi iti :Jurisdiction within the context
of adjudication
- is the power of the
adjudicator
- to hear and decide
- a dispute referred to him
- issue his decision

2. Courts may set it

aside/overturn the decision
as a whole
- For the 2nd scenario:
1. Courts may enforce the part
of the Decision that is valid,
and
2. May refuse to enforce the
remainder that is invalid

JURISDICTION : AN INTRODUCTION (II)

GENERAL RULE

In a dispute between 2
parties in a construction
contract :-

(b) regardless of errors

of fact, or procedure
etc
(2) If the Adjudicator was
not validly appointed,
or he decided
something other than
the dispute that was
referred to him :
(a) his decision would
be unenforceable
(b) because it was
made without
jurisdiction

Adjudicators power to
investigate his own
jurisdiction :

- provisions under CIPAA

Adjudicator can
investigate any partial
or full challenge to his
jurisdiction

However, in the
ordinary case and
without specific
agreement by the
parties, the
adjudicator does not
have jurisdiction to
decide his own
jurisdiction i.e.
KompetenzKompetenz doctrine
does not apply

- parties agreement

Jurisdictional Challenges :
- Timing
Ti i
- Types
- Parties involved
- Effect
- Court
Courts
s role

KOMPETENZKOMPETENZ

GENERAL RULE

- the KompetenzKompetenz principle

(1) If an adjudicator is
validly appointed and
attempts to answer that
dispute :(a) his decision will be
binding in
accordance
acco
da ce with
t
CIPAA

ADJUDICATORS POWER TO
INVESTIGATE/ DETERMINE
OWN JURISDICTION

PRACTICAL ISSUES

44

French word for

CompetenceCompetence

It means :The adjudicator

has the necessary
competence to
rule on its own
jurisdiction with
respect to a
particular
matter/dispute
referred to it

Can be given to
adjudicator by :
- agreement of
parties, or
- statutorily

EFFECTS OF BREACH
OF KOMPETENZKOMPETENZ
O

Decision by the
adjudicator would
be challenged. It
will be :(a) non-binding
(b) unenforceable
(c) may set aside
by the Courts

Adj dicator may

Adjudicator
ma
not be able to
collect his fees
and expenses

JURISDICTION : JURISDICTIONAL CHALLENGES (I)

TYPES

Full challenge

Partial challenge

In relation to :

WHEN TO CHALLENGE ?

At the commencement of
the Adjudication
Proceedings

During the course of the

Adjudication Proceedings

After the Decision at

Enforcement Stage

- the jurisdiction itself, or

- extent/limit of
Adjudicators jurisdiction

CHALLENGERS OPTIONS

After the Adjudicators

Appointment

45

OPTION 2

OPTION 1

Challenger can
agree to refer the
challenge to the
same adjudicator
and be bound by
the result
Condition :
Agreement needed
of :

Challenger
can refer to
another
Adjudicator

First
adjudication
does not stop
but continues

- Opposing Party,
and
- Adjudicator

Effects : Challenger
bound by
adjudicators
decision
- cannot challenge
it, or
- resist
enforcement on
grounds of
adjudicators lack
of jurisdiction

Condition :
Agreement
needed of
opposing party
Rarely used/
uncommon in
practice

OPTION 4

OPTION 3

Challenger can
seek declaration
from the High
Court that the
adjudicator lacks
jurisdiction

Challenger reserves
its position :
- by setting out in
clear terms
- the grounds of its
objections

Question of time,
costs and
cooperation
between Parties
involved

Normally :
Adjudicator to
adjourn
proceedings
di
with
ith
agreement of
both parties
pending
resolution of issue
by the court

Having fully
reserved its position
:
- Challenger can
participate in the
proceedings
- if required by the
Adjudicator, make
submissions on its
objections

If the opposing party

is ultimately
successful in
obtaining an
adjudication
decision in its favour
and seeks to
enforce it :
- Challenger can
challenge the
validity of the
decision
- on grounds of
adjudicators lack
of jurisdiction

JURISDICTION : JURISDICTIONAL CHALLENGES (II)

PROCEDURE IN
INVESTIGATING
JURISDICTIONAL
CHALLENGES
4 step procedure, per
Coulson :
- validity of the
Adjudicators
Adjudicator
s
appointment
- identification of
the Dispute
- relevance of earlier
Adjudication
Decisions
- ousting of
Adjudicators
Jurisdiction in other
ways
Procedure much
depends on :
- matter under
investigation
- body/person
undertaking the
investigation

First step of
procedure :
Consider whether
or not adjudicators
appointment
i t
t is
i valid
lid
under the Act
Factors to be
considered :
- was there a
construction
contract ?
- was the contract
in writing?
- were the parties to
the Adjudication
the correct parties
in the construction
contract ?
- was the
appointment in
accordance with
the Act ?
- were all other
relevant provisions
of the Act vis--vis
the appointment
complied
li d with
ith ?

EARLIER
ADJUDICATION
DECISIONS : THEIR
RELEVANCE

IDENTIFICATION
OF THE DISPUTE

VALIDITY OF
APPOINTMENT

Second step of procedure ;

Identify whether the Dispute
falls within the ambit of the
Act

Factors to be considered :
- what was the scope and
extent of the Dispute in the
Written Notice of
Adjudication (i.e. under S5
& 6 of CIPAA) ?
- had the Dispute
crystallised between the
parties prior to the Notice
to Refer ?
- was the Dispute
p
referred to Adjudication, a
Single Dispute ?
- was there sufficient
connection between the
Dispute referred and the
Adjudicators
Adjudicator
s Decision

46

Third step of procedure :

Determine if subsequent
Adjudicator trespasses
onto the Decision of an
earlier Adjudicator

Factors to be considered :
- whether the two disputes
were substantially similar
or not ?

OUSTING
ADJUDICATORS
JURISDICTION

Final step of
procedure :
Determine if
Adjudicators
Jurisdiction had
been ousted in other
ways

Methods of ousting :
- Express
agreement
between the
arties - Implied
agreement
between the
parties

- was there any material

overlap between the two
disputes ?
- did the second decision
alter, revise, modify or
overrule the first
decision ?

- Settlement of
dispute by a
compromise
agreement
- Compromise by
conduct/waiver

- were the adjudications

part of a serial
adjudication or were they
separate or distinct ?
- did the earlier
Adjudicator have
jurisdiction to decide and
was it challenged ?

Examples :

Adjudicator has no
right to unilaterally
and without both
parties consent to
limit or oust his
jurisdiction

47

JURISDICTION : GUIDELINES FROM CASE LAW

SET-OFFS,
ABATEMENTS,
COUNTER-CLAIMS, ETC

EFFECT OF
ERRORS

AUTHORITY OF
ADJUDICATOR

Arises from the Notice of

Adjudication

S27(1) CIPAA from :

- payment claim under
S5 and
S5,
d

Errors of :
- procedure
- fact, or
- law

- payment response
under S6

Do nott preventt the

D
th
enforcement an
Adjudicators Decision
by Summary Judgment
Unless these are to his
jurisdiction

If the Adjudicator answers :

Adjudicator cannot
consider a Respondents
Claim of :
- Set-off
- Abatement,, or
- Defence

Unless it has been

previously raised/detailed
in his Payment Response
(S6)

REPUDIATION
OF CONTRACT

ADJUDICATORS
DECISION

EFFECT OF ERROR
ON EXTENT OF
AUTHORITY

If the Adjudicator makes

an error about the limit/
extent of his authority,
the courts can take 2
options

Option 1 : Overturn the

Decision as a whole and
deny enforcement

Option 2 : Enforce only

that part of the Decision
that is valid

CONTRACT
INTERPRETATION

Disputes concerning :

- the right question in the

wrong way, the decision
will be enforce even if it
is wrong

- whether a party has

failed to perform a
contractual obligation
eg. payment

In a situation where a question

about the interpretation of the
contract is raised

Adjudicator has the :

- the wrong question in

the right way, the
decision will not be
enforced as there is no
jurisdiction

- resulting in repudiation
of contract

Can be considered by the

Adjudicator as a dispute
under the contract

- power to determine the meaning

of the contract terms
- even, if this means determining :
(1) whether there is a valid
appointment of the adjudicator,
and
(2) therefore his authority to act

JURISDICTION UNDER CIPAA

LIMITS TO ADJUDICATORS
AUTHORITY/JURISDICTION
UNDER CIPAA

PRINCIPAL GOVERNING
PROVISIONS

Pi i lP
Principal
Provision
i i
S27 : Jurisdiction of
adjudicator

Others : S8(1),
12(5), 14, 15(d), 16,
17, 18(1), 21-26 &
28

No definition of term
Jurisdiction in
CIPAA

S27(2)

S27(1)

To determine only :
- disputes on matters
- referred to
adjudication by the
parties
- pursuant to S5& 6

To determine :
- any matters other
than those under
S27(1)
- that the parties
agree in writing

NB : Confined to only
Payment disputes

NB : Wider can
extend to even NonPayment disputes

SCOPE

S27(1)

Limited to Payment
dispute on matter
referred to by parties
under :
- payment claim of S5,
and
- payment response of
S6

Exception : if expressly
agreed to by Parties
S27(2)

Very narrow in ambit

Strict adherence to
S27(1) : necessary as
will be likely to be
strictly construed

KompetenzKompetenz doctrine
does not apply unless
subject to S27(2)

In interpretation &
application, common
law principles may
apply in the event of a
lacuna

JURISDICTION UNDER S27

S18

S12

S 12(2) & (4) :

- the tenability of the
dispute
- the liability of the
parties

S12(5) : to determine
- the amount payable
- the party to whom
payable
- the time and manner
of payment

S18(1) : to determine
- costs of adjudication
proceedings
- the costs to be paid
by the relevant party

EFFECTS OF
BREACH

EXTENSION OF
JURISDICTION

CHARACTERISTICS

48

Possible S27(2)

Timing : only after

commencement of
proceedings

Respondent may raise a

jurisdictional challenge

If jurisdiction is established to
have been exceeded :
- adjudication
j
decision can
be challenged by loser
- it can be set aside in whole
or in part on grounds
(S15(d))
- the adjudication decision
can be stayed (S16(1) &
((2))
- application for enforcement
can be opposed (S28(1)

Procedure : by
agreement in writing
between the parties

Scope : to disputes on
matters beyond those
referred to in S5 & 6

JURISDICTION : JURISDICTIONAL CHALLENGES UNDER CIPAA

ADJUDICATORS COURSE
OF ACTION

GENERAL

No express
stipulations in
CIPAA as to the :
- types
- timing
- form
Must refer to
common law
principles.

OPTIONS
EXERCISABLE

Adjudicator may in
his discretion :
either
- decide not to
proceed and
complete the
adjudication or
adjudication,
- decide to
proceed and
complete the
adjudication

OPTION 1

Decision may be :- not to proceed

with the
adjudication,
or
- having
commenced, not
to complete the
adjudication

OPTION 2

PROVISIONS
OF S27(3)

Decision may be :- to proceed with

the adjudication,
and
- to complete it
(S12)

Presumably, must
notify the parties
off his
hi d
decision
i i
preferably in
writing

Presumably, must
notify the parties
in writing of the
decision or can
be implied by
allowing
ll i
proceedings to go
on
Governed by
S27(3)

49

Application : in the event

there is a Jurisdictional
challenge and the
adjudicator adopts Option 2
ie
i.e.
- he decides to proceed,
and
- complete the adjudication
proceedings

Pursuant to S27(3), there is

without prejudice :
- to the rights of any party
- to apply to set aside the
adjudication decision
under S15, or
- to oppose the application
to enforce the adjudication
decision under S28(1)

Question of whether the

adjudicator
dj di t will
ill b
be entitled
titl d tto
his fees and expenses if the
Jurisdictional challenge is
upheld is not stipulated in
CIPAA

11.0 MAKING & DELIVERY OF

ADJUDICATION DECISION
& POST-PUBLICATION OF
DECISION

DETERMINATION - MAKING AND DELIVERY OF

ADJUDICATION DECISION (I)

GOVERNING
PROVISIONS

CONDUCT OF THE
ADJUDICATION - S12(1)

S12 Adjudication
& decision

S13 Effect of
adjudication
decision

S19 Adjudicators
fees, expenses, etc

WHERE S19(5) NOT

COMPLIED WITH

Time periods of S12(2) not

applicable

Decision may be delivered

after S19(5) is satisfied

Refer next slide

(deliver = written decision

decision, served
on the parties & KLRCA Director)

WHERE ADJUDICATION
RESPONSE/REPLY SERVED

WHERE ADJUDICATION
RESPONSE IS RECEIVED

S12(3) Adjudication decision is void &

unenforceable, cannot trigger suspension
or reduce progress of the works to
compel payment. Ritchie Brothers
(PWC) Ltd v David Philip
(Commercials) Ltd (2005)

Adjudicator cannot collect fees and

expenses(S19(6))

Parties may have to recommence

adjudication

WHERE PARTIES
AGREE TO OTHERWISE

S12(2)(a)

S12(2)(b)

S12(2)(c)

Time period: 45 Working

Days from:

Time period: 45 Working

Days from:

Form: Presumably in
in Writing
Writing

Preferably to be sent to
Adjudicator before expiry of 45
working days stated in
S12(2)(a) and (b)

Adjudicator:
- Cannot unilaterally extend
time under S12(2), only
vide S12(2)(c)

- Adjudication Response, or
- Adjudication Reply
whichever is later

- Expiry of the period of 10

Working days as
prescribed for service
of response
p
in S10(1)
( )

TIME FOR ADJUDICATOR TO

DECIDE DISPUTE AND DELIVER
ADJUDICATION DECISION

EFFECT OF FAILURE TO
COMPLY WITH S12(2)

WHERE S19(5)
COMPLIED WITH

50

EFFECT OF
COMPLIANCE WITH
S12(2)

S13 ; Adjudication
decision is binding

Unless :
- set aside by High Court
S15, or
- matter
tt settled
ttl d by
b
parties or
- dispute finally decided
by arbitration/court

51

CONDUCT OF THE ADJUDICATION - S12(1)

Adjudicator is the master of the procedure, may conduct the
adjudication in any manner which he considers
considers appropriate
appropriate , also
proceedings not subject to Evidence Act 1950
Not unfettered :- adjudicator to decide within prescribed time
- must act independently & impartially
- in
i a ti
timely
l manner without
ith t iincurring
i unnecessary costt
- comply with NJ

BURDEN OF PROOF

BOUND TO APPLY LAW

may inquire inquisitorially

terms of contract

BOP lies with the alleging party

common law & statutory rights & obligations for

issues like prolongation variation, liquidated damages
& defects.

SQ Pte Ltd v SR Pte Ltd (2009) - Claimants rates

refused to be considered by adjudicator because
rates have no basis, instead Respondents rates
were used because they were used by other
subcontractor

it is statutory system operating alongside a

contractual regime (Transgrid v Siemens Ltd &
Anor (2004))

DETERMINATION MAKING AND DELIVERY OF

ADJUDICATION DECISION (II)

GOVERNING PROVISIONS

NATURE

S12 and 13

S18 20

S24 27

ADJUDICATION DECISION

RECEIPIENTS

Similar to an Arbitration
Award but not so
detailed

S12(6)

3 Main Parties:
- Claimant
- Respondent
- KLRCA Director
Send hard copy by
registered post or
recorded delivery,
& soft copy by
email

Must comply with

CIPAA provisions

CONTENTS

Not stipulated /
prescribed
Up to discretion of
adjudicator

S12(4)

To be In Writing

Not defined

MODE OF SERVICE

S12(4) and (5) & S18

S38

Prescribed contents:
- Reasons (unless not
required by parties)
- Adjudicated amount
- Time and manner
this is to be paid
- Costs of adjudication
proceedings
(overriding any prior
agreement)

4 Main Modes: S38(a) to (d)

FORM

CORRECTION OF
ERRORS

FORMAT

52

Any other matter to

render decision valid
and enforceable eg.
Complying with terms of
the contract on period
for payments, allow for
set-off
set
off & counterclaims
in the adjudicated
amount.
Sign & date
- sign to signify final
decision & not a draft
- date : (a) whether
decision was made
within time (b) time
for judicial review or
challenges run from
date of decision

SCOPE

Not addressed in UK
regime but case law
permits : Bloor
Construction (UK) Ltd v
B
Bowner
& Ki
Kirkland
kl d
(London) Ltd (2000)

Permissible under S12(7)

(slip rule)

Type of errors covered :

- Computational
- Typographical

Method :
- At request of any party
- Adjudicator on his own
volition
No time limit (within a
reasonable time
Adjudicator cannot revisit
substantive findings of law
& fact

EFFECT

S12(8)

Enforcement of
adjudication decision not
affected in any way

Any correction so made is

deemed to take effect
from the date of original
adjudication decision

POST-PUBLICATION OF DECISION

LOSERS
OPTIONS

PRELIMINARY
MATTERS

Timing : following
collection/ receipt of
Decision
Both parties to
check and verify :
- accuracy//
completeness
- correctness
- compliance with
CIPAA of
Adjudication
Decision

For errors that are :

- computational
- typographical
apply to
djud cato for
o
Adjudicator
correction (S12(7))

ACCEPT THE
DECISION

Decide on next
course of action to
take

Give effect to
the decision ii.e.
e
pay the winner :
- the
adjudicated
amount
- within the
time, and
- in the
manner

Risk of default
on Loser

Winner may
be able to
enforce
Decision as
provided for
under CIPAA

stated in the
Decision

Alternatively,
- negotiate
i
and
d
- settle with
Winner a
mutually
agreed
amount

WINNERS
OPTIONS

CHALLENGE
THE DECISION

QUIET/ DO
NOTHING

Apply to High Court :

- to set aside
Decision (S15
provides for
grounds of setting
aside due to
- jurisdiction
- not independent
or impartial
- failure
f il
tto observe
b
NJ. Also, S24 no
conflict)
- for a stay of
Decision
(S16(1)(a))

Court may issue any of

the Orders (S16(2))

Adjudication decision
may be expected to be
enforced even if it
contains error of
procedure, fact or law.
A
Arcadis
di UK Ltd v May
M
& Baker Ltd (t/a
Sanofi)(2013) :
- adjudicators are not
legally trained
- limited time to
produce decision &
t digest
to
di
t substantial
b t ti l
amount of material
- cannot compare
decision with
detailed court
judgement.

53

WHERE LOSER
DOES NOT COMPLY/
CHALLENGES

WHERE LOSER
COMPLIES WITH THE
DECISION

Settle the matter byy

accepting payment from
winner :
- per Adjudication
Decision, or
- any agreed Settlement
Agreement

WHERE LOSER
DOES NOT
COMPLY/KEEPS
QUIET

WHERE LOSER
CHALLENGES IN
HIGH COURT

Resist/Challenge the
application for
- setting aside (see next
slide)
lid )
- stay

Seek enforcement (S28)

Seek Direct Payment

from Principal (S30)

Pursue Slowing
Down/Suspension of
Work (S29)

Exercise all these

remedies concurrently
(S31)

Seek enforcement (S28)

PRINCIPLES TO CONSIDER FOR SETTING ASIDE OF ADJUDICATION DECISION

Case :

Joinery Plus Ltd (in administration) v Laing Ltd (2003) :

Judge Anthony Thornton QC (English Technology & Construction Court) ::-

Principle 1 : The precise question giving rise to the dispute that has been referred to the adjudicator must be identified.
Principle 2 : If the adjudicator has answered the referred question, even if erroneously or in the wrong way, the resulting decision is both valid and
enforceable. If, on the other hand, the adjudicator has answered the wrong question, the resulting decision is a nullity.
Principle 3 : In determining whether the error is within jurisdiction or is so great that it led to the wrong question being asked and to the decision being a
nullity,
llit the
th courtt should
h ld give
i a fair,
f i natural
t l and
d sensible
ibl interpretation
i t
t ti to
t the
th decision
d i i and,
d where
h
there
th
are reasons, to
t the
th reasons in
i th
the
light of the disputes that are the subject of the reference.
Principle 4 : A mistake which amounts to a slip in the drafting of the reasons may be corrected by the adjudicator within a reasonable time but this is a
limited power that does not expand to jurisdictional errors or errors of law.
Principle 5 : In deciding whether an error goes to jurisdiction, it is pertinent to ask whether the error was relevant to the decision and whether it caused
any prejudice to either party.
party
Principle 6 : A wrong decision as to whether certain contract clauses applied; or as to whether a particular sum should be evaluated as part of, or should
be included in the arithmetical computation of, the final contract sum in a dispute as to what the final contract sum, does not go to
jurisdiction.
Principle 7 : Where the claim that was considered by the adjudicator is significantly different in its factual detail from the claim previously disputed and
referred, the resulting decision was one made by reference to something not referred, was without jurisdiction and was unenforceable since
the adjudicator had asked and answered the wrong question.
CHALLENGING ADJUDICATION DECISION ON GROUNDS OF NATURAL JUSTICE
Case :

Cantillon Ltd v Urvasco Ltd (2008)

Akenhead J (English Technology & Construction Court) :-

(a)

It must first be established that the Adjudicator failed to apply the rules of natural justice.

(b)

Any breach of the rules must be more than peripheral; they must be material breaches.

(c)

Breaches of the rules will be material in cases where the adjudicator has failed to bring to the attention of the parties a point or issue which they
ought to be given the opportunity to comment upon if it is one which is either decisive or of considerable potential importance to the outcome of
the resolution of the dispute and is not peripheral or irrelevant.

(d)

Whether the issue is decisive or of considerable potential importance or is peripheral or irrelevant obviously involves a question of degree which
must be assessed by any judge in a case such as this.

(e)

It is only if the adjudicator goes off on a frolic of his own, that is wishing to decide a case upon a factual or legal basis which has not been
argued or put forward by either side, without giving the parties an opportunity to comment or, where relevant put in further evidence, that the
type of breach of the rules of natural justice with which the case of Balfour Beatty Construction Company Ltd v The Camden Borough of
Lambeth was concerned comes into play. It follows that, if either party has argued a particular point and the other party does not come back on
the point, there is no breach of the rules of natural justice in relation thereto.

54

12.0 ENFORCEMENT

ENFORCEMENT OF DECISION : (I)

GOVERNING
PROVISION

Part IV : S28 to 31

PARTIES INVOLVED

ENFORCEMENT
AS HIGH COURTS
JUDGMENT

Applicable Provision : S28 (procedure similar to an application in arbitration)

Procedure :
- Winner may apply to High court
- for an order to enforce adjudication decision
- as if it is an order/ judgment of the court
Note : In UK : Macob Civil Engineering Ltd v Morrison Construction Ltd (1999) :
- commenced proceedings in court & apply for summary judgment
judgment.
Claimant to show :(a) Respondent has no real prospect of successful defending the claim, &
(b) no compelling reason why the case should be disposed at trial.

Time Period : within applicable limitation period

S28(2), High Court may

S28(2)
may :
- make an order in regard of the decision either :
1. wholly, or
2. partly (if a claim item has not been argued before the adjudicator)
- make an order in respect of interest on adjudicated amount payable

S28(3) :
- order made under S28(2) may be executed in accordance with the rules of
execution of Orders/Judgment of High Court
Note : In NSW, there is no provision for setting aside of adjudication determination,
only to the judgment which has been entered for the purpose of enforcing an
adjudication determination.

CONCURRENT
EXERCISE OF
REMEDIES

ENFORCEMENT OF
REMEDIES THROUGH
CONSTRUCTION
CONTRACT

Party who obtained

adjudication
decision in his
favour : Winner
Party against whom
adjudication
decision made :
Loser

55

PRE-CONDITION

Existence of a
valid & subsisting
construction
contract

Can only apply if

construction
contract had not
been :
- repudiated, or
- terminated

PRE-CONDITION

Performance of
work either :
- reduce rate of
progress; or
- suspend
completely

Applicable
Provisions : S31

Precondition : No
j
stayy of adjudication
decision has been
granted by High
Court under S16

Winner, may under

S31(1) exercise :
- any,
any or
- all of the remedies
provided under
CIPAA
concurrently to
enforce decision

S31(2) : Remedies
provided under
CIPAA are without
prejudice to other
right/remedies
available :
- in the Construction
Contract, or
- any written law
- including any
penalty provided
under any written
law

Pursuant to S29

Seek Direct
Payment from
Principal under
S30

Remedies can be
exercised
concurrently with :
- any, or
- all other
remedies
under S31

ENFORCEMENT OF DECISION : (II)

56

SUSPENDING/SLOWING WORK PERFORMANCE

(as in Clause 16.1 of the FIDIC Conditions of Contract for
Construction (Red Book 1999))

RIGHT ACCRUES

To Winner
S29
If adjudicated
amount not paid :
- wholly/partly
- after receipt of
decision under
S12(6)

PRE-CONDITIONS

Receipt of a
Valid Decision
Construction
contract still
subsisting
No stay granted
under S16
Procedure in
S29(2) & (3)
satisfied

NATURE OF RIGHT

Discretionary
See use of word
may
But must be
exercised with
applicable
period of
limitation

OPTIONS EXERCISABLE

2 main Options Exercisable

in the alternative (see use of
word or)
or )
Either :
- suspend performance, or
- reduce rate of progress of
performance
Of either :
- Construction work, or
- Construction consultancy
services
(as applicable) under
Construction contract

ENFORCEMENT OF DECISION : (III)

57

SUSPENDING/SLOWING WORK PERFORMANCE

PROCEDURE

TYPE

2 steps
p :
- notification of
intention, and
- follow-up action

Steps are sequential

in nature

SECOND STEP

FIRST STEP

Contents of Notice :
- S29(2)
- intention to
exercise either
option
- if loser does not
pay adjudicated
amount within 14
calendar (not
working) days of
receipt of notice

LOSER PAYS
ADJUDICATED AMOUNT

Within 14 days stated in

Winners notice of
S29(2)

S29(3)(d) :
- winner must resume
1. performance, or
2. rate of progress of
performance

Form of Notice :
Presumablyy In
Writing

Mode of Service :
S38

Recipient : Loser

- time to do so :
1. within 10 working
days of payment by
Winner
2. default to do so :
possible breach of
p
contract

LOSER FAILS TO PAY

PER NOTICE

Upon expiry of 14 calendar (not

working) days period Winner has
right to exercise option : S29(3)

Though no further notice is required

under the Act, it may be useful to
serve a notice declaring the
commencement of suspension or
reduction of the rate of progress of
performance

Consequences (S29(4)) : Winner :

- not in breach of contract
- entitled to under the contract
for :
1. fair and reasonable
EOT; and
2. any
y loss and
expense incurred (site & head
office overheads & profit due
to prolongation. Also
Respondent may omit
remainder work depriving
Claimants profit)

Entitlements to be pursued
contractually :
- presumably contractual
procedures need to be followed
- no sanctions for default in
granting entitlements stated

Some obligation arises if

amount paid is
determined by
arbitration/court (S37(1))

ENFORCEMENT OF DECISION : (IV)

58

DIRECT PAYMENT

RIGHT ACCRUES

PRE-CONDITIONS

NATURE OF RIGHT

To Winner

Receipt of a
Valid Decision

Discretionary

S30
If adjudicated
amount not paid
by Loser :
- wholly/partly
- after receipt of
decision

Construction
contract still
subsisting
N
No stay
t granted
t d
under S16
Existence of a
Principal as
defined in S4
Money must be
due or payable
by Principal to
Loser S30(4)
Procedures in
S30(1) to (3) are
satisfied

See use of word

may
But must be
exercised with
applicable
li bl
period of
limitation

APPLICABLE
Only where there is the
existence of a Principal (S4)
in the construction contract
other than the Winner and
Loser
Should cover :
- domestic sub-contracts
- nominated sub-contracts
- other sub-contracts
- other contractual
arrangements
satisfying
ti f i provision
i i
Who is a Principal :Eg. Main contractor (C) Employer/owner (R)
(The Principal)
Sub-contractor (C)
subcontractor (R)
Principal = main
contractor

ENFORCEMENT OF DECISION : (V)

59

DIRECT PAYMENT
PROCEDURE

TYPES

3 steps :
- request for
payment
- notification by
Principal
- consequential
action by Principal
Steps are sequential
in nature

FIRST STEP

Request for payment

S30(1)

Party making :
Winner
Winner

Recipient : Principal

Form : In Writing

Mode of service :
S38

Contents S38(1) :
- request for
payment of
adjudicated
amount
- for direct payment
from Principal of
this amount

Recommended
contents :
- details on the
decision
- copy may be
annexed
- preferably, time
within such
payment be made

THIRD STEP

SECOND STEP

Time to act :
- not stipulated
- has to be
reasonable but no
sanction stated
Form of action :
- S29(2)
- service of notice
on loser :
1. to show proof of
payment, or
2 di
2.
directt paymentt
would be made after
expiry of 10 working
days of receipt of
notice

No sanction
stipulated in CIPAA

Possible action for

Breach of Statutory
Duty

Winner to pursue
other remedies

LOSER FAILS
TO COMPLY
WITH NOTICE

LOSER
COMPLIES
WITH NOTICE

PRINCIPAL
DOES NOT ACT

PRINCIPAL ACTS
ON REQUEST

Matter considered
settled

S30(3) :
- Principal shall pay
Winner direct
1. use of shall
connotes
mandatory
requirement but no
sanctions stated
2. timing for payment :
not stated but
presumably in next
certificate
3. only if Principal
owes money to
Loser S30(5)
- S30(4) :
Principal may recover
money so paid as a :
1. debt, or
2. set-off
from any money due
or payable to the
Loser

ENFORCEMENT OF OTHER REMEDIES

APPLICABLE
PROVISION
Section 31
comprising
- Section 31(1)
- Section 31(2)
Title: Concurrent
exercise of remedies

PRE-CONDITIONS
PRE
CONDITIONS

Receipt of a valid
Adjudication
D i i
Decision
No Stay granted
under S16 by the
High Court, or
Decision not set
aside pursuant to
S15

PARTY
ENTITLED
Party who obtained
Adjudication Decision
i hi
in
his favour
f
i th
i.e.
the
Winner

ENTITLEMENTS
S31(1)
Winner may
exercise:
- Any, or
- All
of the remedies
provided in CIPAA:
- Concurrently,
- To enforce the
Decision
Nature of right:
Discretionary (see
use of word may)

60

ENTITLEMENTS
S ( )
S31(2)
Remedies provided
under CIPAA are
without
ith t prejudice
j di tto
other rights and
remedies available
in:
- The Construction
Contract or
Contract,
- Any written law
including any
penalty
provided under any
written law
Very wide in scope
and ambit

13.0 CONFIDENTIALITY

CONFIDENTIALITY

GENERAL RULE

Adjudication proceedings
are confidential & private

Parties under duty of

confidentiality are
1. Adjudicator
2. The parties, and
3. The Appointing
Authority

GOVERNING PROVISION
UNDER CIPAA

S20 :
Confidentiality of
adjudication

The common law

duty puts in a
statutory form

EXTENT

Prohibition from
f
disclosure off any :
- statement
- admission, or
- document

Whether such is :
- made
d ((submissions
b i i
&
statements), or
- produced (all documents
retrieved or collated including
evidentiary & supporting
documents)) for the purpose
p p
of
adjudication
Also include adjudication claim,
response, reply, decision,
directions, correspondences
between parties
To another person

DUTY UNDER S20

CIPAA

Not stated expressly in

CIPAA

Party breaching may

be liable for breach of
confidentiality

EXCEPTIONS TO
DUTY UNDER S20
See next slide

EFFECT OF BREACH

61

EXCEPTIONS

NATURE OF DUTY

Presumably :
mandatory

See use of the word

shall not

Another
Another person
person
may mean any
person, other than :
- the other party,
- the adjudicator, or
- the appointing
authority

Disclosure may however

be made in the
situations expressly
stated in the Act itself

These are S20(a) to (d)

Burden of proof on party

claiming the exception

62

EXCEPTIONS TO DUTY UNDER S20

CONSENT

IN PUBLIC
DOMAIN

NECESSITY

S20(a)

S20(b)

S20(c)

With the consent of

the party

Where the
information is
already in the
public domain eg.
press report on the
Respondents
insolvency

Where disclosure is
necessary for
purpose :
- of the enforcement
of the Adjudication
Decision, or
- any proceedings in
court or arbitration

Form of consent :
- preferably in
writing
- but may be
implied from
conduct/waiver

Definition of public
public
domain
- none in CIPAA
- to be elicited
from authority

Disclosure to
consultants &
advisors

REQUIREMENT
UNDER
CIPAA/LAW
S20(d)
Where disclosure is
required for any
purpose under :
- CIPAA (for
purpose of
regulating the
quality of
adjudication, also
complaints
against
adjudicators, for
feedback &
subsequent
revision
i i off th
the
Act), or
- any written law
For training
purposes
p
p
&
feedback after
properly sanitised

NATURE OF
EXCEPTIONS

Prima facie :
Extensive
But limited when
p
to :
compared
- S68 CCA 2002
(NZ)
- S33 BCJ SPA
2004 (Singapore)

14.0 IMMUNITY

IMMUNITY

GOVERNING
PROVISION UNDER
CIPAA
C

DEFINITION/
FEATURES

An exemption from legal

liability

Conferred on a person/
body

Usually
U
ll on grounds
d off
public policy

Normally by the State

Extent : can be
- completely/wholly;
- limited/party

S34 comprising :
- S34(1)
- S34(2)

63

KLRCA AND ITS

OFFICERS

PARTIES COVERED

S34(1)

3 main categories :
- the adjudicator
- the appointing
authority (KLRCA)
- officers of KLRCA

SCOPE

S34(1)

Immunity against the

institutional/maintenance
of any :
- legal action, or
- legal suit
in any Malaysian court

EXTENT

SCOPE

S34(1)

S34(1)

For any :
- act , or
- omission
in the performance of :
- KLRCAs functions
- officers functions
under CIPAA

Immunity applies
only if the
act/omissions is
done in good faith

No Statutory
definition of good
f ith : to
faith
t use
common law
principle

ADDITIONAL
IMMUNITY

CONDITION

S34(1)

S34(1)

S34(1)

Immunity against the

institutional/maintenance
of any :
- legal action, or
- legal
g suit
in any Malaysian court

For any :
- act , or
- omission
in the performance of
his functions under
CIPAA

Immunity applies only if the

act/omissions is done in good faith

Good faith may require adjudicator to

follow :
- reasonable
bl standards
t d d off behaviour
b h i
of another reasonable adjudicator,
and
- a standard of fair dealing expected
of another reasonable adjudicator

Protection extends to
action in contract or tort

CONDITION

EXTENT

ADJUDICATOR

S34(2)

Adjudicator who has adjudicated

dispute under CIPAA

Cannot be forced to give any

evidence
e
de ce in a
any
y:
- arbitration, or
- court proceedings
in connection with the dispute that he
has adjudicated

15.0 CONSOLIDATION OF
PROCEEDINGS

64

CONSOLIDATION OF PROCEEDINGS

DEFINITION/
FEATURES

Term used to refer to

procedure where in
law :
- ttwo or more
disputes/ cases
- may be ordered to
be tried/ determined
at the same time

PURPOSES/
OBJECTIVES

S14 : consolidation
of adjudication
proceedings

Allows the
consolidation of 2
or more
adjudication
proceedings

To be adjudicated
by the same
adjudicator in the
same proceedings
proceedings
No specific
procedure stated

To save time, costs

and effort

For reasons of
convenience

To prevent
duplication of
proceedings

To avoid separate &

conflicting findings
by
y different
adjudicators on the
same matter

PROVISION IN
CIPAA

PRECONDITIONS/
PRE-REQUISITES

To balance the
parties interests

ANTICIPATED
PROCEDURE

EFFECT OF
CONSOLIDATION

SCENERIO 1

SCENERIO 2

Consent of parties
required :
- to extend claim,
response &
adjudication periods
of original
adjudications
- while the
subsequent
adjudications are
being consolidated

If different adjudicators
had already been
appointed to different
adjudications

Subsequent
consolidation can only
occur by the
withdrawal of claim
(S17) from one or
more adjudications

- will bind all parties to

the consolidated
adjudication
proceedings
- will be enforceable for
or against them (as
applicable) and the
provisions of CIPAA
will apply accordingly

SIMILARITY OF
DISPUTE

EXISTENCE OF ADJUDICATION
PROCEEDINGS

Adjudication proceedings should have

commenced
d

The subject matter of the

di
dispute
t

3 main situations envisaged :

- adjudication should have been
initiated (S8), or
- adjudicators should have been
appointed (S21 to 23), or
- adjudication
j
p
proceedings
g should
have started

Being adjudicated in the

different adjudication
proceedings

Must be same i.e. similar

e.g. payment etc.

Any determination/
decision by the
adjudicator after
consolidation :

WRITTEN
CONSENT

All parties to the

adjudication proceedings
intended to be
consolidated
- must give consent
- Form : not stated but
presumably in writing

DIFFICULTIES

(1)

Can only apply if

issues are
inextricably linked

(2)

Parties must feel that

they receive equal
treatment. Difficult to
achieve because
adjudication is of
short durations to
accommodate all

(3)

Complication with
timelines arising from
availability of witness
& experts

(4)

Cooperation of a
larger number of
parties is difficult

(5)

Differences in
timelines for payment
claim & response.
Therefore,
adjudication decision
is delayed & will
affect others cash
flow

Setting aside Adjudication decisions

SettingasideAdjudicationdecisions
Limited grounds :
1) Fraud/ bribery
2) Denial of natural justice
3) Adjudicator not independent or impartial
4) Adjudicator acted in excess of his jurisdiction

Natural Justice and Adjudication

NaturalJusticeandAdjudication

PrinciplesofNaturalJustice
Adjudicatormustanswerthequestion
j
q
Eachpartymustknowtheallegationsmade
E h
Eachpartymusthavetheopportunitytoknow
h
h
i
k
andrespondtoevidence

Adjudication Process
AdjudicationProcess

TypicalSequenceofEvents
Typical
Sequence of Events
ADisputeandNoticeofAdjudication
AdjudicatorSelectionandAppointment
Claim & Response
Claim&Response
ProcedureduringtheAdjudication
TheDecision

RoleoftheParties

JurisdictionalChallenges
g
Extensionstotheadjudicationperiod
S b i i
Submissions
Meetings&OralPresentations
Experts&OtherAssistance
Natural Justice
NaturalJustice

AdjudicatorsDecision

Content
Reasons
PartyCosts&AdjudicatorsFees
Interest
ReachingaDecision&Mistakes
E f
Enforcement
t

O er ie
Overview

Introduction
Purpose of a Decision
Conducting an Adjudication Proceeding
j
Decision
The Adjudication
Structure of the Determination
Correction
Confidentiality

Introd ction
Introduction
Adjudicators
j
written decision is an important
p
document in the adjudication process.
Decision to be made in writing with reasons
unless the parties mutually agree in writing
to dispense with it.
it
2 distinct purposes of a decision:a) For immediate implementation in on-going
on going
project administration; and
b) Longer term use possibly in court action

P rposes of a Decision
Purposes
2 broad applications:pp
a) For immediate implementation

To resolve dispute in the construction process

Assist parties to avoid future claims and disputes
of similar nature
Assist parties with future payment certificates and
final account

P rpose of a Decision
Purpose
b) For legal reasons:

An Adjudicators written decision becomes a

primary document for a party wishing to enforce
the decision.
decision
Allows aggrieved party to prevent enforcement of
an adjudicator
adjudicators
s decision pending final resolution
by another dispute resolution process.

Cond cting Adj

Conducting
Adjudication
dication Proceedings
An Adjudicator has limited time to reach a decision eg.
CIPAA requires adjudicator to decide disputes & deliver
the written decision within 45 working days (9 weeks) or
any extended time thereof,
thereof granted by the parties from
service of reply to adjudication response

Failure to meet the deadline - the decision is void and

the adjudicator forfeits his right to his fee!

Cond cting Adj

Conducting
Adjudication
dication Proceedings
One of the 1st task of an adjudicator after
appointment is to review the nature of the issues
involved.
Identify issues such as :
o Whether the agreement is in writing;
o Jurisdiction challenge;
o Exemption

Po ers of the Adjudicator

Powers
Adj dicator (CIPAA)
(a) :
(b) :
(c) :
(d) :
(e) :
(f) :

Establish procedures in the conduct of the

proceeding
di
Decide on own jurisdiction and as to the scope
of any dispute referred to it
Conduct any meeting as he thinks fit, and only
bound byy rules or p
procedures in the Contract &
KLRCA guidelines
Take initiative in ascertaining facts and required
f a decision
for
d i i
Use his own specialist knowledge & expertise
Decide on provisional relief eg interim and
conservatory measures

Po ers of the Adjudicator

Powers
Adj dicator (CIPAA)
(g) :
((h)) :

(i) :

(j) :

Conduct any
y hearing
g and limiting
g the
hearing time;
Inspection
p
of site,, work,, materials or g
goods
relating to dispute including opening up
work for inspection;
Inquisitorially take the initiative to ascertain
the facts and the law required for the
decision;
Issue any direction as may be necessary or
expedient;

Po ers of the Adjudicator

Powers
Adj dicator (CIPAA)
(k)
( ):
(l) :
(m) :
(n) :
(o) :
(p) :

Order interrogatories
g
to be answered;
Order that any evidence be given under
oath or affirmation;;
Order the discovery and production of
documents;;
Set deadlines for production of
documents;;
Appoint independent experts;
Call for meeting with parties;

Po ers of the Adjudicator

Powers
Adj dicator (CIPAA)
(q) :
((r)) :
(s) :
(t) :

Decide or declare on any matter

notwithstanding no certificate has been
issued in respect of the matter;
A
Award
d financing
fi
i charges
h
& interest;
i t
t and
d
extend time limit imposed on the parties
as reasonably required.
required
Open up, review & revise any certificate,
decision determination,
decision,
determination instruction,
instruction opinion
or valuation of the parties or contract
administrator
of the parties?

Dealing
g with common incidents in a
proceeding
A
An adjudicator
dj di t mustt b
be able
bl & willing
illi tto h
handle
dl
difficult situations when it arises in a proceeding
Common incidents encountered:o
o
o

Challenges to jurisdiction
Intimidation
U
Unmanageable
bl d
documentation
t ti

Challenge to jurisdiction
j risdiction
Unlike in the Arbitration Act,
Act the principle of KompetenzKompetenz
Kompetenz does not apply. Therefore, an adjudicator is not
able to determine his own jurisdiction
Adjudicators jurisdiction limited to matters referred to in
adjudication
How to handle jurisdiction challenge?
o Meet the parties to understand the rationale of the
challenge;
o Record all things that transpired during the meeting;
o Ask parties to submit;
o Decide whether the challenge has merit
merit. If yes
yes, stay
stay. If
frivolous, continue.

Intimidation

A recalcitrant or unwilling party may be out to delay the process,

to make
k spurious
i
challenge
h ll
to the
h adjudicators
dj di
d
decision,
i i
use
dilatory tactics to delay the process, canvassing confusing legal/
technical arguments or even threaten to walk out of the
adjudication process.

An adjudicator must not be rattled by such antics. He must never

show any anger or make off-the-cuff decisions in response to
such tactics.

It is always a good practice to direct such arguments to be put in

writing

Always make tri-party communication, not with only one party.

E cessi e documentation
Excessive
doc mentation
This is usually associated with a situation of ambush
by the Claimant.
Ambush is an issue of denial of natural justice to one
party where the swamping of excessive documents by
th Claimant
the
Cl i
t will
ill lead
l d to
t situation
it ti where
h
R
Respondent
d t is
i
denied adequate time to file the adjudication response
within the stipulated time.
time

E cessi e documentation
Excessive
doc mentation (cont)
To counter such unacceptable practice, an adjudicator
could:o

o
o
o

Set up timetable specifying deadlines, limits or length or

quantity
tit off written
itt documents,
d
t London
L d and
d Amsterdam
A t d
Properties v Waterman [2004] BLR 170
Disallow party to send documents in bits & pieces;
Fix deadline by which all documents must be submitted;
Ask parties to agree to an extension of time if
adjudicator feels decision may not be able to meet the
deadline;

London and Amsterdam Properties

p
v
Waterman [2004] BLR 179
Facts
The terms of appointment of an adjudicator had
provided inter alia,
provided,
alia that the Referral Notice should not
exceed 20 pages;
Claimant ignored this and served a Referral Notice in
excess of 1,000 pages;
The adjudicator
j
decided that the reference did not
comply with the said terms, he would receive the first
20 pages as the Referral to found his jurisdiction and
directed the Respondent to limit its response to 20
pages.

London and Amsterdam Properties

p
v
Waterman [2004] BLR 179
Court held on this point
The adjudicator was entitled to:
o
o

Regard the shortened 20

20-page
page Referral as sufficiently
compliant with the UK Scheme; and
Receive the other documentation in the manner that he did

Structure of the Decision

TheRecord

TheReasons

TheDecision

The Record
Recital of the Contract details:
details:

Establish contract details;

Appointment of the Adjudicator
Adjudicator, by the parties or by KLRCA;
Scope of the issues;
Background facts;
Actions, if any, taken by the adjudicator;
Information your decision is based, i.e. payment claim,
payment response,
response adjudication claim,
claim adjudication response
and adjudication reply, if any.
Information obtained during the meeting with the parties.

The Reasons
Required to give reasons for his decision unless
dispensed with by the parties
Persuasive reasons help losing party to understand
how it lost the case. Reasons must withstand scrutiny
if the Decision is challenged.
g
It must be clear, cogent and certain.
From p
practical standpoint,
p
, some calculations and
explanations are essential to assist in the
implementation of the decision.

Assessing Evidence
Deal with any claim systematically,
systematically deciding first
whether the Claimant is entitled for the claim.
Unless the Respondent is liable to the Claimant for the
claim, an adjudicator may not proceed to determine
the q
quantum of claim to award.
First to determine liability requires references to the
contractual terms, implied terms by way of the
common law or the statute, and other additional
agreements, whether written or oral.

Assessing Evidence
Once the liability is established,
established proceed to determine
the quantum to award to the parties.
Burden always on the claiming party to prove.
prove Popular
Industries Ltd v Eastern Garment Manufacturing Sdn
Bhd [[1989]] 3MLJ 360.
Standard of proof is on the balance of probability.

The Decision
Operative part of the adjudicators decision.
decision
States the sum of money awarded to the Claimant i.e.
the adjudicated amount.
amount
State the date the losing party is to pay the winning
party i.e.
i e the payment due date.
date

The Decision
For interest on a principal sum awarded - state the
date of commencement, the rate and the rest.
Include the cost of the adjudication.
adjudication Usually costs
costs
follow event means the winning party is entitled to be
paid reasonable cost,, i.e. p
p
partys
y cost,, adjudicators
j
fee
and administrative fee of the appointing body.
Decision must be dated and signed but need not be
witnessed.

Award of Interest
A
An Adjudicator
Adj di t is
i empowered
d to
t award
d interest
i t
t
and financing cost.
Interest refers to the award of post-decision
i t
interest
t similar
i il
t
to
j d
judgment
t debt
d bt interest
i t
t
entitlement under the Court Rules.

Correction
Th
The Adjudicator
Adj di t
may att any time
ti
correctt any
computational or typographical error, either on the
adjudicators
adjudicator
s own initiative or at the request of any
party.
Enforcement of Adjudication Decision shall not be
affected in any way by a request for correction.
correction
C
Correction
i deemed
d
d to have
h
taken
k effect
ff
f
from
d
date
of original adjudication decision.

Confidentiality
Adj
Adjudicator
di t
and
d
th
the
parties
ti
(i l di
(including
representatives)
are
required
to
ensure
confidentiality of entire proceeding.
proceeding
C
Confidentiality
fid ti lit can be
b lifted
lift d under
d the
th following
f ll i
exceptions:o
o
o
o

With consentt off allll parties

ti
If information is already in public domain
Disclosure is necessary for enforcement of decision
Disclosure is required for any purpose in any written law

Ifpaymentisnotmadeafter
AdjudicatorssDecision
Adjudicator
Decision
1) Cansuspendorreduceprogressofwork,provided
noticeisgiventolosingparty
Winnerentitledtofair&reasonableEoT &recover
any loss & expense incurred
anyloss&expenseincurred
2) Winnerhasrighttorequestdirectpaymentfrom
p
principal
p
3) Adjudicatorsdecisionenforceableasifjudgmentor
orderoftheCourt
4) Winnercanexerciseanyoralloftheabove
4)
Wi
i
ll f h b
concurrentlyoroneafteranother

Costs
Costsfollowtheevent loserpayslegaland
otherrelatedcostsofthewinner
1) Parties costs lawyers, advisors,
documentation etc
documentation,
2) Adjudicators fees & costs
3) Nominating body & Administrator eg
KLRCA

ArchitectssroleinCIPAA
Architect
role in CIPAA
1) Be aware of CIPAA
2) Understand the contract CIPAA compliant
3) Ensure all provisions of contract are capable of
i l
implementation
t ti
4) Have clear and workable payment terms in the contract
5) Keep up to date records,
records correspondence,
correspondence contract
documents & drawings
6) Update certificates interim certs, EoT, CPC
7)) Ensure right figures used in interim certs
8) Ensure work valued complies with quality or should be
excluded from payment
9) Have a systematic documentation process
10) Usually Main Con vs Employer or SubCon vs Main Con