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PROFESSIONAL PRACTICE
The Malaysian Surveyor

1. Whether CIPAA applies retrospectively to main ground that there was a breach of natural justice
construction contracts entered into before CIPAA, i.e. when the adjudicator refused to consider the cross
15th April 2014? contractual set off.
2. If CIPAA applies retrospectively, does section 35 also
apply retrospectively to all construction contracts High Court & Court of Appeal
entered into before CIPAA i.e. 15th April 2014? The High Court found for PWC Corporation and held
that the adjudicator was right in declining jurisdiction
It was held that CIPAA applies prospectively as it affects
substantive rights of parties by providing an additional over and beyond the project/contract before him given
avenue for parties to commence legal actions to claim that the other two contracts were before different
for monies due and not just a mere change of forum adjudicators. This was also affirmed by the Court of
(from court or arbitration to adjudication). It creates a Appeal. The arguments that CIPAA applies prospectively
new avenue for access to justice and is not merely a were raised by Ireka in the Court of Appeal.
procedural legislation as the procedural regime exists as Ireka appealed to the Federal Court.
a by-product of this substantive right.

Hence in so far as Section 35 of CIPAA is concerned, it Federal Court
prohibits parties to rely upon payment arrangements. Its The same quorum who heard Jack-In Pile heard the
applicability is prospective as well and cannot be relied current appeal and decided (on the same grounds)
on to void the pay-when-paid clause entered into before that CIPAA applies prospectively. The Federal Court did
15th April 2014. not address the cross contractual set off issue which
remains alive today.
The Federal Court also considered Sections 2, 3 and
41 of CIPAA which set out the applicability and non-
applicability of CIPAA. The Federal Court concluded that Future Outlook
Parliament would have included an express section in
CIPAA if it was intended to apply retrospectively. The Federal Court’s decisions in Jack-In Pile and Ireka
impacted the construction industry where all parties
Ireka Engineering & Construction with construction contracts entered into before 15th
April 2014 can no longer resort to statutory adjudication
Sdn Bhd v PWC Corporation Sdn under CIPAA. It was also stressed that a retrospective
Bhd and Two Other Appeal Cases application would prejudicially affect vested rights of
the parties or the legality of the transaction under the
contract.
Background
However, the Federal Court’s decisions have created
In the case of Ireka Engineering, Ireka appointed PWC practical difficulties and uncertainties, particularly
Corporation under three contracts for construction in relation to the recovery of monies paid out under
projects in Mont Kiara, Sandakan and KL Sentral adjudication decisions which will now be rendered void.
respectively, all of which were entered into before CIPAA For example:
came into force.
Adjudication Decisions based on contracts entered into
Disputes arose under the three projects and PWC before 15th April 2014 and enforced as judgments in the
Corporation initiated adjudication proceedings against High Court are now void. The following predicaments
Ireka. Ireka’s primary defence and / or cross claim in the may be encountered by affected parties:
adjudication proceedings was that it had a right to set
off any amount claimed by PWC Corporation against any a. The avenues to recover the adjudicated sum paid out
amount due or liable to be paid by PWC across all three will likely be through the initiation of arbitration or
projects (“cross contractual set off”). court proceedings.

The adjudicator in delivering a decision in favour of PWC b. The legal recourse for the principal / employer to
Corporation, decided that he had no jurisdiction over recover monies paid pursuant to Section 30 of CIPAA
disputes arising out of the other projects and contracts where the wining party receives payment directly
as they concerned other contracts and the disputes were from the principal / employer is unclear.
before two other adjudicators. c. The legal recourse for companies wound up premised
PWC applied to enforce the adjudication decision. Ireka on a now void adjudication decision is unclear.
applied to set aside the adjudication decision on the

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