Setting Aside of CIPAA 2012 Adjudication Decision by the Claimant / Unpaid Party

The enactment of Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012) allows the contractors / consultants to recover construction outstanding payment and resolve payment dispute speedily.

However, there were cases where the Contractor’s / Consultant’s claims being wrongfully dismissed by the Adjudicator. In such scenario, it is previously thought that after the Unpaid Party’s / Claimant’s claim is dismissed by the Adjudicator, the Unpaid Party / Claimant can only proceed to recover the payment by commencing arbitration proceeding / court litigation, which often time could be very expensive and time-consuming.

In this case, the High Court clarified and held that an aggrieved Claimant may also set aside the Adjudication Decision which is not in its favour pursuant to Section 15 of CIPAA 2012 where:

(a) the adjudication decision was improperly procured through fraud or bribery;

(b) there has been a denial of natural justice;

(c) the adjudicator has not acted independently or impartially; or

(d) the adjudicator has acted in excess of his jurisdiction.

Section 15 of CIPAA 2012

Syarikat Bina Darul Aman Bhd & Anor v Government of Malaysia [2017] MLJU 2381

Background Facts

The background facts of this case is as follow:

1. The Government of Malaysia (“Employer“) had appointed Syarikat Bina Darul Aman Bhd (“Contractor“) as the contractor for the construction and completion of Trans Eastern Kedah Interland Highway based on PWD 203A Standard Form of Contract (Rev 10/83).
2. The Employer had granted 5 certificates of extension of time (EOT) to the Contractor during the progression of work.
3. Upon the completion of the works, the Contractor submitted its final claim of RM22,188,726.00.
4. However, the Employer only allowed the claims of RM137,512.95.
5. Dissatisfied with the Employer’s decision, the Contractor commenced a claim pursuant to CIPAA 2012 against the Employer for the amount of RM24,061,739.29 as a Claimant.
6. Surprisingly, the Adjudicator dismissed the Claimant’s claims in toto and reasoned that:-
   1. The Claimant had not prayed for the Adjudicator to revise the certificate issued and he had not jurisdiction to revise the certificate;
   2. The Claimant had not proved its claim;
   3. “Loss and Expense” claim arising out of extension of time fall outside the purview of CIPAA 2012 and the Adjudicator does not have the jurisdiction to adjudicate the claim;
7. Dissatisfied with the Adjudicator’s findings and the Adjudication Decision, the Claimant sought to set aside the Adjudication Decision under Section 15 of CIPAA 2012 and a declaration that the Claimant is entitled to recommence CIPAA Adjudication Proceeding against the Respondent.

High Court: Aggrieved Claimant may apply to set aside CIPAA 2012 Adjudication Decision

The High Court held that in a case where the Claimant is successful only in part of its claim or the whole claim is dismissed in the CIPAA Adjudication Proceeding, the Claimant may apply to set aside the Adjudication Decision under Section 15 of CIPAA 2012.

The High Court reasoned that a Claimant comes within the meaning of an ‘aggrieved person’ under Section 15 of CIPAA if the Claimant is successful only in part of its claim or the whole claim is dismissed.