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PROFESSIONAL PRACTICE
Vol.54 No.3 & 4 2019

Retrospective No More: The

Construction Industry Payment &

Adjudication Act 2012 Moves Forward

by Janice Tay and Ooi Chih-wen

This paper discusses recent Federal Court decisions on the Construction Industry

Payment and Adjudication Act 2012 and the effect on adjudications where the
legislation is held to only apply prospectively.

Keywords: Construction, Adjudication, Construction Industry Payment and Adjudication

Act 2012 (CIPAA).

The issue on the applicability of the Construction Industry applied to set aside the adjudication decision on the
Payment and Adjudication Act 2012 (“CIPAA”) has finally main ground that Section 35 of CIPAA does not apply
come to an end with the ruling of the highest court of retrospectively to the dispute as parties have exercised
the land in the landmark cases of Jack-In Pile (M) Sdn their contractual rights under the pay-when-paid clause
Bhd v Bauer (Malaysia) Sdn Bhd and Ireka Engineering & before CIPAA was enacted.
Construction Sdn Bhd v PWC Corporation Sdn Bhd and
two other appeals. On 16th October 2019, the Federal High Court
Court delivered its grounds of judgment holding that
CIPAA only applies prospectively to contracts entered into The High Court found for Jack-In Pile and held that
after CIPAA came into force on 15th April 2014. CIPAA (and Section 35 which voids pay-when-paid
clauses) applies retrospectively relying on the High Court
decision of UDA Holdings Bhd v Bisraya Construction
Jack-In Pile (M) Sdn Bhd V Bauer Sdn Bhd & Anor [2015] 11 MLJ 499 (“UDA Holdings”).
(Malaysia) Sdn Bhd Bauer appealed to the Court of Appeal.

Court of Appeal
Background
The Court of Appeal overturned the High Court’s decision
Jack-In Pile was appointed by Bauer as a subcontractor and found that CIPAA applies prospectively to contracts
through a letter of award dated 16th March 2011. The entered into after 15th April 2014 given that it affects
letter of award contains a pay-when-paid clause where all substantive rights of parties, i.e. rights to payment
payments to Jack-In Pile shall only be made within seven pursuant to contract. Jack-In Pile appealed to the
days from the date Bauer received its related progress Federal Court.
payments from the employer. In reliance of that clause,
Bauer takes the position that it has no obligation to pay Federal Court
Jack-In Pile until and unless it receives payment from the
employer. In return, Jack-in-Pile relied on Section 35 of The Federal Court affirmed the Court of Appeal’s
CIPAA which renders pay-when-paid clauses void. decision that CIPAA applies prospectively and in making
its decision, the Federal Court expressly disagreed with
Jack-In Pile initiated adjudication proceedings against the High Court in UDA Holdings.
Bauer and obtained an adjudication decision where Bauer
was required to pay the sum of RM 906,034.00. Jack-In In the appeal to the Federal Court, the following
Pile applied to enforce the adjudication decision. Bauer questions were raised for determination:

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