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THE CONSTRUCTION INDUSTRY PAY MENT

AND ADJUDICATION ACT 2012 (CIPA)
COMES INTO OPERATION
16 Apr 2014

Kuala Lumpur - The Construction Industry Payment and Adjudication

Act (CIPAA) 2012 has come into operation effective 15 April 2014. The
Act was passed on 18 June 2012 and gazetted on 22 June 2012. The
Construction Industry Payment and Adjudication Regulations 2014 and
the Construction Industry Payment and Adjudication (Exemption)
Order 2014 have both been approved by the Minister of Works Datuk
Haji Fadilah bin Yusof and is operative 15 April 2014 to complement
CIPAA 2012.

The Kuala Lumpur Regional Centre for Arbitration (KLRCA) has been
named the adjudication authority by virtue of Part V of CIPAA 2012,
giving the centre a key role in being the default appointing,
administrative and training authority for statutory adjudication. The
KLRCA has put in place the internal infrastructure to handle the
administrative process of statutory adjudication at the centre.

The Minister of Works has approved CIPAA 2012 to apply

retrospectively. In effect CIPAA 2012 applies to all construction
contracts with immediate effect save those that have been exempted.

The Construction Industry Payment and Adjudication (Exemption)

Order 2014 seeks to exempt two categories of Government
construction contracts. The first category of Government construction
contracts are contained in the First Schedule of the Exemption order
namely a contract for any construction works that involve emergency,
unforeseen circumstances and that relate to national security or
security related facilities.

The second category of Government construction contracts are

contained in the Second Schedule of the Exemption order namely
construction contracts with the Government of the contract sum of
RM20 million and below.

With regards to this second category, the exemption order merely

exempts these contracts from the application of subsections 6(3),
7(2), 10(1), 10 (2), 11(1) and 11(2) of CIPAA 2012, and relates to the
timeline for submissions and replaced with a set of longer timelines
for such submissions.

It is also a temporary exemption from 15 April 2014 to 31 December

2015 for this second category. However, the exemption order does
not extend to construction contracts to which the Government is not
a party.
 The CIPAA 2012 and the accompanying Regulations and Exemption
Order can be viewed on the website of the Federal Government
Gazette at www.fe de ral gaz e t te .agc .gov .m y
(ht tp://hongi e .c om /e m arke ti ng/l t.php?
c = 5 2 2 &m = 5 2 2 &nl = 3 1 3 &s = b9 c 4 2 ff6 7 4 8 de 1 0 f7 a6 9 ff7 a7 9 d9 2 2 7 4 &l i d= 3
ht tp- - www.fe de ral gaz e t te .agc .gov .m y)

Edited Statement By:

Professor Datuk Sundra Rajoo
Director
KLRCA

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