March 03, 2014
Arbitral body urges government to implement CIPAA 2012 by mid-year
The Kuala Lumpur Regional Centre for Arbitration (KLRCA) has urged the government to implement the much–awaited Construction Industry Payment and Adjudication Act (Cipaa) 2012 by mid-year as promised, or earlier than that.
Director Datuk Sundra Rajoo said the new Act, drafted to provide a solution to cash flow-related problems in the construction industry, is currently pending approval from the Ministry of Works.
“It should be approved this year because the ministry has issued a statement saying it will be implemented in the middle of this year.
“There is so much pressure in the industry. Market players keep on asking about it and making a lot of noise.
“KLRCA has done its part and now we want them (the government) to make the decision to implement it (the Act) or not. If not, then they have to explain,” he told reporters today.
The Cipaa Act 2012 was passed on June 18, 2012 and gazetted on June 22.
Once implemented, Cipaa 2012 will introduce statutory adjudication as a dispute resolution which provides for the recovery of payment upon the conclusion of the adjudication process, in addition to a host of other remedies.
It includes the right to reduce the rate of work progress or to suspend work or even to secure direct payment from the principal.
The Act further provides default payment terms in the absence of provisions to that effect in the construction contract.
Sundra said several regulations have been sent to the Works Ministry with a few changes being made to suit the Act with the industry as well as some exemptions, and that certain carve-outs have been requested by the government.
He said a ministry spokesman said the government has proposed that contracts involving national security, emergency works as well as government construction contracts worth RM20 million or less be exempted.
He said the government should narrow down and categorise the proposals clearly, such as which contracts affect national security and public safety, coupled with the impact on bumiputera companies.
Meanwhile, Minister in the Prime Minister’s Department Nancy Shukri, in expressing her support, said there is a possibility for the Cipaa to be implemented this year as the new Act will be very important for the national construction industry, which is a significant contributor to Malaysia’s booming economy.
“The introduction of this Act will be a great relief for most contractors in Malaysia as it is one of the solutions to delayed payments, non-payment and disputes in the construction sector as disputes could be resolved through statutory adjudication instead of long-drawn trials and waiting period.
“With Cipaa, Malaysia has now joined the likes of the United Kingdom, Australia, New Zealand and Singapore as nations that recognise the importance of resolving payment dispute in a fair, just and expeditious manner,” she said.
Under the Act, KLRCA is the adjudication authority and Section 40 of Cipaa states the minister may grant any exemption after considering the recommendation of the body. – Bernama, February 25, 2014.
Source : The Malaysian Insider