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SERVING OF NOTICE AND DOCUMENTS IN CIPAA ADJUDICATION – WHERE IS THE NORM NOW?

11/3/2021

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​SERVING OF NOTICE AND DOCUMENTS IN CIPAA ADJUDICATION – WHERE IS THE NORM NOW?

UPDATE: On 4 Apr 2022, the AIAC has issued circular 11, prescribing manner of serving notices, adopted for CIPAA 2012. Apparently, s.38(a)-(d),CIPAA 2012, wasn’t that definitive when comes to the recent findings of the courts as in Skyworld Development Sdn Bhd v Zalam Corp Sdn Bhd[1], where delivery of AR-Registered is presumably delivered unless rebutted. Here, the definition of ‘delivery at its ordinary course’ does not imply the ‘date of posting’. Such, sender has to provide ‘sufficient period of time’ for delivery, as in regard to s.38(c), CIPAA 2012: Service by Registered Post. Applying such to serving of Payment Claim, Notice of Adjudication and other Notices including the Decision, the ‘actual receipt’ of such notices is indicated. It is manifested that the AIAC attempted to provide clarity, but it dropped short of specifying what does it mean by ‘sufficient period of time’? Compounded by the absent of clarity as to what it meant by ‘indicate’ and ‘acceptance’ in the Interpretations Act 1948, the burden now, rests squarely on the shoulders of the Adjudicator.    

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[1] [2019] MLJU 162

Assuming that Claimant had filed a Request to Appoint an Adjudicator and the Adjudicator had proposed his terms of appointment, with only the acceptance by the Claimant agreeing that communication is via email. Respondent has not responded at all. The Adjudicator then emailed and couriered his Notice of Acceptance via Form-6 on the last working day i.e. day-10. The parties would not have possibly receive the physical Form-6 by then.
 
The questions were whether failure of the parties receiving the physical Form 6 within the 10 working days constitute a breach of s.23(2) CIPAA? If so, what constitute the manner of serving of notices?
 
The law holds:
 
S.23(2) CIPAA states, “The adjudicator shall propose and negotiate his terms […] within ten working days from the date he was notified of his appointment, […]”
 
S.38 CIPAA states, “Service of a notice or any other document under this Act shall be […] a) By delivering the notice or document personally […] b) By leaving the notice or document […] during the normal business hours of that party; c) By sending the notice or document […] by registered post; or d) By any other means as agreed in writing […]”
 
The evidence shows:
 
One, there is no mutual acceptance by the parties of the Adjudicator’s terms and communication via email. Thus, method of serving notice or document as prescribed under S.38 CIPAA prevailed.
 
Two, parties would not have possibly received the physical Form 6 within then. So, whether such failure to receive the physical Form 6 constitute a breach of s.23(2) CIPAA? To answer this, can courier services be construed as hand delivery? If so, what constitute hand delivery? Ordinary meaning of courier, is a person or company that takes messages, letters or parcels from one person or place to another.[1]  Whereas, hand delivery is to take something to someone yourself or send it by courier.[2] Therefore, a courier service can be construed as by hand. Thus some insisted that an affidavit be taken by the courier serviceman to affirm that the documents had been served. Implying such, it must be a recorded delivery.
 
Three, parties may have received the document past the ‘normal business hours’. This condition is not warranted with regard to s.38(a). We are not clear who would have been there to receive it past the ‘normal business hours’? S.38(b) holds that document is deemed served ‘by leaving it at the usual place of business’, ‘during normal business hours’. This provision is in contrasts to the HC decision that a ‘day’ as in a ‘working day’ covers 24-hours.[3] Thus, if the documents were couriered within the same working day, duly recorded by statutory affirmation or recorded delivery, it is deemed to have been delivered.
 
Concluding:

Whether failure of the parties to receive the physical Form 6 within the 10 working days period constitute a breach of s.23(2) CIPAA, the short answer is depends on the merits. It is in breach, if the courier is of an unrecorded delivery or with no statutory affirmation, delivered outside the last ‘working day’. It is not a breach if the conditions and merits would had unfold otherwise. What constitute the manner of serving of notices? It is as prescribed by S.38 CIPAA either by hand delivery; leaving at the office during ‘business hour’; or via registered post; or by any other means agreed.
 
Having considered that, assuming the Adjudicator sent the notice by registered post instead of courier, would the ‘postal rule’ applied? What is in the postal rule? The ‘postal rule’[4] and communication via email[5] are commonly applied in contractual transaction. In postal rule, communication deemed to have occurred once the letter has been posted (registered). However, email is not governed by this postal rule.[6] Malaysia has similarly adopted this postal rule via application of the s.4(2)(b) Contract Law 1950.[7] However, can this postal rule also applied in Adjudication?
 
Two contrasting approaches, with regards to ‘postal rule’. As applied observed in the serving of writ of summons via AR-Registered Post, on one hand, there is no provision of law that Plaintiff must prove that the named person had received the writ of summons and statement of claim, being sent by AR-Registered Post, unless rebutted by Defendant.[8] On the other, affidavit of service must prove ‘due service’ of writ of summons and that the lacuna of the Rules of Court 2012 (“ROC”)[9] must be interpreted in favour of the Defendant.[10] This unsettled law was revisited by the courts recently, contemplating whether the acknowledgement of AR-Registered Post receipt card is conclusive proof? The HC and Court of Appeal hold that it was conclusive prove. The FC disagree and went on to say, AR-Registered Post receipt card is not conclusive if the affidavit does not exhibit the receipt card  does not contain an endorsement of receipt by the Defendant or nominee.[11]
 
Adjudication mirrors the conduct of the court. Can the Adjudicator simply drop the notice off at the post office and call it a day? In reflection of Goh Teng Whoo case[12] the short answer is ‘No’. Service by way of AR-Registered Post does not conclusively mean that the recipient has received the same as the AR-Registered Post, continues to be interpreted as ‘service and time’ of service are ‘presumed’ and ‘until the contrary is proven’.[13] We have yet to see this judgement be applied to an Adjudication case.

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[1] Cambridge Dictionary <https://dictionary.cambridge.org/dictionary/english/courier> accessed 3 Nov 2021
[2] Cambridge Dictionary <https://dictionary.cambridge.org/dictionary/english/hand-deliver> accessed 3 Nov 2021
[3] Skyworld Development Sdn Bhd v. Zalam Corporation Sdn Bhd & Other Cases. [2019] 1 LNS 173
[4] Adams v Lindsell [1818] 1B&Ald.681
[5] S.7.Electronic Communications Act 2000; Neocleous v Rees[2019]EWHC2462(Ch)
[6] Thomas v BPE Solicitors [2010] EWHC306(Ch); Greenclose v National Westminster Bank [2014] EWHC1156(Ch)
[7] Ignatius v Bell (1913) 2 FMSLR 115
[8] Yap Ke Huat & Ors v Pembangunan Warisan Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175
[9] Order 10 Rule 1(1) ROC
[10] Chung Wai Meng v Perbadanan Nasional Berhad [2017] 1 LNS 892
[11] Goh Teng Whoo & Anor v Ample Objectives Sdn Bhd (Civil Appeal No: 02(i)-35-04/2019(W)
[12] [2021] MLJU 300
[13] S.12 of the Interpretation Acts 1948 and 1967 
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MY MEDIATION LOG-BOOK: MEDIATING A CRIME?

10/9/2021

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I received a request for mediation from an architect friend whom project has reached a dead-lock. Apparently, the pandemic has more often than not, caused havoc to the construction industries. I am more welcome to mediate for the parties. What happened next, send shivers to my spine. As a practice, I always perform a pre-mediation meeting with the parties. Foremost, it allows me to set out from the onset the procedures and efforts in mitigating parties’ expectations of the mediation. Second, is to allow the mediator to understand the nature of the dispute more and to correlate information.

The parties informed me that, the project started on a good footing, but ended on a bad note of delay and non-payment. That is very common in most of the disputes, I encountered. I thought to myself that this matter is mediatable. The architect also informed that since the project has gone ‘sour’ the contractor has in fact made an official complaint to LAM on the basis of the architect failing to perform its role as a contract administrator. That matter, is another good story for another day. Notwithstanding the complaint, the contractor proceeded to mount a claim against the employer. But realizing that it is going to be an expensive affair, they decided to mediate their disputes.

Upon probing further, they disclosed that from the onset, the employer has requested the project to be procured based on two separated contracts. One is as per the tendered sum, [cheaper-version], we called contract-A, two, the employer’s request [manipulated version], we called contract-B. Contract-B was necessary because the Bank would only finance 80% of the contract sum. So, in order to finance 100%, the tender price will need to be increased another 20%, thus the manipulation. Problem arises is when the employer refused to pay and in retaliation, the contractor demanded that they had never agreed to contract-A and all these while they only agreed on contract-B.

So, what made me shiver is the legal question of whether contract-B being the manipulated version is a fraudulent misrepresentation to the bank? If so, being a fraud, the case is criminally laced, can mediation be proceeded on this account?

The law governing mediation holds, foremost, “this Act shall not apply to – (a) any dispute regarding matters specified in the Schedule [11. Any criminal matter]”[1]; second, “notwithstanding ss(1) [no person shall disclose any mediation communication], mediation communication may be disclosed if, (c) the disclosure is required under this Act for the purpose of […] criminal proceedings […]”[2]; third, “Any mediation communication is privileged […], (2) notwithstanding ss.(1) [privilege], the mediation communication is not privileged if – (d) it is used or intended to be used to plan a crime, […] to conceal a crime […]”[3]; and finally, “the mediator shall not be liable […] unless the act or omission is proved to have been fraudulent […]”[4].

The law governing fraudulent misrepresentation holds, that ‘misrepresentation’ is, being an unambiguous ‘false statement of facts’[5], addressed to the party misled[6], inducing the ‘victim’ into entering a contract.[7] However, the law[8] assumes that one commits fraudulent[9] misrepresentation, which is a criminal offence[10], and the burden of proof is vested upon the defendant[11]

The fact is the mediation is yet to commence; there is an attempt to fabricate the contract sum for the purpose of concealment and fraudulent misrepresentation may have elementally observed but has yet to be ascertained by the court. In application, the request of the employer on contract-B contains the element of fabrication, the contractor, consultant QS and architect are equally involved in such act. Matter turns complicated when the consultant QS who facilitate such arrangement had since passed away, leaving the architect to be potentially ‘grilled’ in the court of law.

Concluding, the mediation was not conducted owing to the element of crime. Parties were left to resolve their matters amicably. This is the sort of dispute that can never be mediated, arbitrated nor adjudicated. The only venue for recourse is the criminal court. Lesson learnt, it is a very common practice in the industries that a separate contract was kept for different purposes and this followed by issuance of certificates by the consultants. As contract administrator, we cannot guarantee that parties will keep to their end of the bargain, so, when matters are not within the controls anymore, hell break loose and consultants are trapped. Worth the risks?  

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[1] S.2(a) Mediation Act 2012 (‘MA2012’)
[2] S.15(2)(c)MA2012
[3] S.16(2)(d)MA2012
[4] S.19MA2012
[5] Kleinwort Benson v LincolnCC.[1999]2AC349
[6] Brennon v Bolt[2004]EXCACiv1017
[7] Renault v Fletpro[2007]EWCH2541
[8] Hedley Byrne v Heller[1964]AC465
[9] Derry v Peek(1889)14AppCas337
[10] Barclays Bank v O’Brien[1994]1AC180
[11] Esso v Mardon[1976]QB801
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“IF ITS AIN’T BROKEN, IT’S NOT WORTH MENDING” – A LOOK INTO A ‘DYSFUNCTIONAL’ DISPUTE CLAUSE

9/22/2021

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[POSTSCRIPTS]: One interesting feedback that I get from an Architect was, "Can an Architect be a Quasi Arbitrator?" To answer that, we ought to ask the question as to whether Arbitration is a business of Law or Architecture? The question led me to search any legal case that address such and I found that there is indeed one! 

An argument arise when the business of architecture also include being arbitrator or more aptly known as quasi-arbitrator. What is ‘quasi-arbitrator’? There is no legal definition of ‘quasi-arbitrator’, and the closest are given as:

Per Lord Reid, “person who undertake to act fairly have often been called quasi-arbitrator […] all persons carrying out judicial function must act fairly […] there is nothing judicial about an architect’s function in determining whether certain work is defective. There is no dispute. He is not jointly engaged by the parties. They do not submit evidence as contentious to him. He makes his own decision and comes to his own opinion.”[1]

Per Lord Salmon, “[…] no more reason for regarding the architect as being in the same position as a judge or arbitrator than there is for so regarding the Valuer […] The descriptions 'quasi-arbitrator' […] have been invoked but never defined. […] Judges and arbitrators have disputes submitted to them for decision […] evidence and the contentions of the parties are put before them […] They then give their decision. None of this is true about the valuer or the architect who were merely carrying out their ordinary business activities. Indeed, their functions do not seem to me even remotely to resemble those of a judge or arbitrator.”[2]

Arbitration falls within the ambit of law, not architecture as the saying goes, when you have a dispute, you go to the lawyers, not the architects. Therefore, it cannot be said that arbitration is an extension of the knowledge, study and practice of architecture and the various arts and science connected therewith.  

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[1] Sutcliffe v Thackrah [1974]1 All ER: at p.864
[2] Ibid,p.882

​“IF ITS AIN’T BROKEN, IT’S NOT WORTH MENDING” – A LOOK INTO A ‘DYSFUNCTIONAL’ DISPUTE CLAUSE 

This article attempt to demonstrate how a scenario requiring a ‘legal advice’. The scenario given is fictional, but the application of law mirrored real event. Any resemblance of the character in this scenario, to anyone alive or dead or any institution existed or non-existent, is purely coincidental.
 
[SCENARIO]: ‘Sure-win’ and ‘Must-win’ enter into a contract issued by ‘Malu-Usia’ Society of Project-Managers (“MSPM”), hereinafter ‘MSPM-Form’. The form contains an exclusion clause fine-printed, “parties are held to rely on their judgement when using this form of contract and MSPM takes no liability whatsoever to anyone in connection with the usage of the form”. The dispute clause contained therein, state “Any dispute[1], arising out of or relating[2] to this contract, shall be finally determined[3] by arbitration, by applying to the President of Malu-Usia’ Society of Project-Managers (“MSPM”) to appoint an Arbitrator, in accordance with the MSPM Arbitration Rules in force at the time of the commencement of the arbitration.”
 
Parties went into dispute. Sure-win commence arbitration by an application to MSPM President, as they cannot agreed to one another on the candidate of the arbitrator. The parties foresee that an ‘institutionalize administered arbitration’ would be fair and just. An arbitrator was appointed and the proceeding went on as usual. The counsel of ‘Must-win’ found out that the constitution of incorporation of MSPM in accordance with the Society Act of Malu-Usia, does not contain any provision that MSPM can accord any services of alternative dispute resolution (‘ADR’). In fact, all statutes of Malu-Usia mirrored those of the Malaysian Law. The counsel pose a challenge that due to the alleged dysfunctional of the dispute clause, his client Sure-win’s position has now been prejudiced on the basis that he has been misled fraudulently by MSPM through the use of the MSPM-Form. ‘Sure-win’ is contemplating to sue MSPM.
 
You are appointed by MSPM. Discuss on the point of law, the legal implications of both your client and Sure-win.
 
To consider the legal implications of both Sure-win and MSPM, [THE ISSUES] are: foremost, whether MSPM has the jurisdiction to provide services beyond what has been incorporated in its object of incorporation in accordance to the law? If so, whether MSPM breaches the law? If so, whether the MSPM President has the power to appoint arbitrator for the parties as in accordance to the provision of the dispute clause? If so, whether the President is acting on its personal capacity in such an appointment or in the office of the MSPM President? If so, whether the President has acted in ‘ultra vires’ against the object of the society he represented? If so, whether the dispute clause is dysfunctional due to the illegality of the dispute clause itself on the context of the severe lack of inherent jurisdiction of the society to provide such services? Is it not an ad-hoc arbitration that the MSPM President is at liberty to choose who he wishes? If so, whether the party has been fraudulently misled? Ultimately, who is liable?
 
[THE LAW] holds that: foremost, a society cannot provide any means of services that is not prescribed in its objects of incorporation.[4] Further, the law also provided that, a President is an individual who acted in its capacity as representative of the society as an ‘office-bearer’ in accordance to the Act.[5] In addition, the law provides that ‘misrepresentation’ is, being an unambiguous ‘false statement of facts’[6], addressed to the party misled[7], inducing the ‘victim’ into entering a contract.[8] However, the law[9] assumes that one commits fraudulent[10] misrepresentation, which is a criminal offence[11], and the burden of proof is vested upon the defendant[12]. As for the ‘fine-prints’, the law allows that terms can be incorporated by notice, where it must be given before the time of concluding the contract[13], terms must be contained/referred in the document[14] i.e. contractual[15], reasonable steps be taken to bring the term[16] to the party’s attention[17] i.e. a ticket[18] must be explicit[19], with a clause not in-front of ticket (not incorporated)[20], reference to clause is obliterated (not incorporated)[21], reference to a website (incorporated)[22], and ‘more unusual and unreasonable’ is the clause, higher degree of notice is required[23]. Finally, the issue of illegality in contract law, it holds that illegality comes in different ‘sizes and shapes’ and it is difficult to categorise. Generally, it covers ‘commissioning of a legal wrong’ or ‘contracts against public policy’[24].[25] Illegality affect the contract in two ways, ab-intitio as to its formation[26] and ‘in the performance’[27], i.e. whether a party entitle to sue to recover losses despite the illegality[28], on such basis he was unaware of the illegality[29]? What if the party has knowledge about the illegality, he is unable to sue.[30] The subject of the contract is made illegal ab-intitio, i.e. against the law[31].
 
[THE EVIDENCE] shows that: MSPM’s object of incorporation, does not contain any provision that MSPM can accord any ADR services. If so, whether the President is acting on its personal capacity in such an appointment or in the office of the MSPM President? By the act of the MSPM President, he in his capacity as an office-bearer, not representing himself, but the society[32] and has acted ‘ultra-vires’ against the object of the society[33]. Thus, whether MSPM has the jurisdiction to provide services beyond what has been incorporated in its object of incorporation in accordance to the law? The short answer is, ‘no’ as the law forbade it. [34] If so, whether MSPM breaches the law? MSPM has not only crossed the law, the society is tantamount to be deregistered.
 
If so, whether the MSPM President has the power to appoint arbitrator for the parties as in accordance to the provision of the dispute clause? Although the dispute clause require the President to appoint arbitrator, it is evidence that MSPM itself has no provision to accord ADR services. As such an illegal act cannot be contracted. [35]
 
If so, whether the President has acted in ‘ultra vires’ against the object of the society he represented? The President of MSPM has taken unto his own hand to perform an illegal act, on behalves of the society, knowing well that he has not accorded with the jurisdiction to do so. The powers [jurisdiction] has to be laid down from the constitution to the office-bearer.[36] In its absent, where is the power to act?
 
If so, whether the dispute clause is dysfunctional due to the illegality of the dispute clause itself on the context of the severe lack of inherent jurisdiction of the society to provide such services? The original intent and purpose of the dispute clause is not dysfunctional. But arising from the illegality of performance by the President of MSPM, in breaching the very fundamental Act of the incorporation of the society, the dispute-clause, which is by itself a formal contract. The question of is severability[37] in this case is irrelevant. Thus the object of a contract [dispute resolution services] cannot be illegal. Such consistent with the recent ruling that holds the dispute clause is governed by the law of contract, not the seat.[38] Thus, the question how can such dispute clause, drafted so carefully to avoid any ‘pathological defects’ can be dysfunctional? The short answer, is the ‘act of appointing the arbitrator’ itself is made illegal, given this context.     
 
Is it not an ad-hoc arbitration that the MSPM President is at liberty to choose who he wishes? The evidence shows that foremost, parties cannot agreed to one another on the candidate of the arbitrator, so they went to MSPM for institution administered arbitration. The parties foresee that an ‘institutionalize administered arbitration’ would be fair and just. This consideration, in itself, is res ipsa loquitur[39] that arbitration is to be held as an instruction administered arbitration, not ad-hoc.
 
The evidence shows that the constitution of incorporation of MSPM does not accord any ADR services to be rendered. This lead to the next question, if so, whether the party has been fraudulently misled? It is undoubtedly, a contract exist between the user of the form and MSPM. The law holds that ‘misrepresentation’ is, being an unambiguous ‘false statement of facts’[40], addressed to the party misled[41] and the law[42] assumes that one commits fraudulent[43] misrepresentation, which is a criminal offence[44], and the burden of proof is vested upon the defendant[45]. Has the President aware of such false statement? Has he not aware of the constitution of the society he holds as office-bearer? Obviously, he has committed a crime.
 
Ultimately, who is liable? The evidence shows that ‘Sure-win’ position has now been prejudiced on the basis that he has been misled fraudulently by MSPM by virtue of the MSPM-Form. In the said form, it was fine-printed, “parties are held to rely on their judgement when using this form of contract and MSPM takes no liability whatsoever to anyone in connection with the usage of the form”. Can this be said to be an ‘exclusion clause’ for liabilities against MSPM? The law holds that terms can be incorporated by notice, where it must be given before the time of concluding the contract[46] and ‘more unusual and unreasonable’ is the clause, higher degree of notice is required[47]. Since the exclusion term is incorporated in the document[48], although as a fine print, it is legible and constitute a valid exclusion clause. In other words, contract advisors who does not strike out the dispute clause and replace with another more legitimate arbitrator appointing institution, had the greater chances to be liable. Notwithstanding such the MSPM with its entire retinue of office-bearer are criminally liable as to the effect of the breaches to the Act. Criminal offences cannot be contracted out.
 
[Concluding]: The fundamental breach is where the office-bearer, has been contracted to act illegally against the Act. The legal impacts are not only the dispute clause made dysfunctional, but include therein criminal offences and contractual liabilities to the contract advisors, namely Project Managers, Architects and QSes. Thus, caveat emptor.[49]
 
POSTSCRIPT: Upon reading this article, Contract Advisors will have a field day of striking off and amending the dispute clauses, by making sure the institutionalize arbitrations are legitimate in accordance to the law, while lawyers with adverse award, will be lining up in court to set aside due to unenforceability and the police will start knocking at the door of the ‘illegal society’.

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[1] Asia International Arbitration (‘AIAC’) model dispute-clause: ‘any dispute, controversy, difference or claim arising […], including the performance, breach, termination or invalidity thereof, as well as any non-contractual claims’
[2] International Commercial Court (‘ICC’) model dispute-clause: ‘or in connection with’
[3] ICC model dispute-clause: ‘settled’
[4] S. 13.(1)(c)(iii) Societies Act 1966 (‘SA1966’): ‘[the Registrar] may, in the following cases, cancel the registration of any society registered […] (c) if the Registrar is satisfied – (iii) that the society is pursuing objects other than the objects with which the society is registered;’
[5] S.2 SA1966: ‘office-bearer: means any person who is the president […]’
[6] Kleinwort Benson v LincolnCC.[1999]2AC349
[7] Brennon v Bolt[2004]EXCACiv1017
[8] Renault v Fletpro[2007]EWCH2541
[9] Hedley Byrne v Heller[1964]AC465
[10] Derry v Peek(1889)14AppCas337
[11] Barclays Bank v O’Brien[1994]1AC180
[12] Esso v Mardon[1976]QB801
[13] Olley v Marlborough Cort[1949]1KB532
[14] Chapleton v BarryUDC[1940]1KB532
[15] Taylor v GlasgowCorp.(1952)SC440.21
[16] Wilkes v Jessop(2007)CLY795
[17] Parker v SE.Railway(1877)2CPD461; Thompson v LMS. Railway[1930]1KB41:exclusion clause incorporated even if claimant was illiterate; Richardson,Spence v Rowntree[1894]AC217:in contrast if defendant knows claimant is illiterate
[18] Thompson v LMS.Railway[1930]1KB41 and Thornton v ShoeLane Parking[1971]2QB163:not given notice, not incorporated.
[19] Interfoto v Stiletto[1988]QB433
[20] Handerson v Stevenson(1875)LR2Sc&Div470
[21] Sugar v LMS Railway[1941]1AllER172
[22] Impala Warehouse v Wanxiang[2015]EWHC25(Comm)
[23] J.Spurling v Bradshaw[1956]1WLR461
[24] Johnson v Driefontein[1902]AC484
[25] Treitel(2015)
[26] Re Mahmoud and Ispahani[1921]2KB716
[27] St.John Shipping v Joseph Rank[1957]1QB267
[28] Shaw v Groom[1970]2QB504
[29] Marles v Philip Trant[1954]1QB29
[30] Asmore Benson v AV.Dawson[1973]1WLR828
[31] St.John Shipping v Joseph Rank(1957)1QB267
[32] S.2 SA1966
[33] S. 13.(1)(c)(iii) SA1966
[34] Ibid
[35] Re Mahmoud and Ispahani[1921]2KB716
[36] S.49 SA1966
[37] Arbitration agreement is severable from the contract in which it is contained. Any challenge relating to the validity of the underlying contract will generally not affect the validity of the arbitration agreement.
[38] Enka v Chubb [2020] UKSC 38
[39] Latin for "the thing speaks for itself."
[40] Kleinwort Benson v LincolnCC.[1999]2AC349
[41] Brennon v Bolt[2004]EXCACiv1017
[42] Hedley Byrne v Heller[1964]AC465
[43] Derry v Peek(1889)14AppCas337
[44] Barclays Bank v O’Brien[1994]1AC180
[45] Esso v Mardon[1976]QB801
[46] Olley v Marlborough Cort[1949]1KB532
[47] J.Spurling v Bradshaw[1956]1WLR461
[48] Chapleton v BarryUDC[1940]1KB532
[49] Let the buyer beware
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MALAYSIA DAY SPECIAL: ‘UNITY IN DIVERSITY’ OF DIFFERENT SEATS WITHIN THE JURISDICTION OF MALAYSIA?

9/15/2021

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​MALAYSIA DAY SPECIAL: ‘UNITY IN DIVERSITY’ OF DIFFERENT SEATS WITHIN THE JURISDICTION OF MALAYSIA?

Postscript: In a similar decision about the application of the seat in the jurisdiction of Malaysia, the case of Tekun Cemerlang[1], it procures a similar decision that, West Malaysia lawyers are prohibited to represent disputants in CIPAA Adjudication where the seats are in Borneo.[2] The repercussions spark suggestion that unlike arbitration, statutory adjudication has no seat.[3] Such opinion rely on the provision of CIPAA[4], as its basis or argument, consistent with the Latin maxim of “generalia specialibus non derogant”[5]. As of now, the decision remains.
 
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[1] Tekun Cemerlang Sdn Bhd v Vinci Construction Grands Projets Sdn Bhd [2021] 11 MLJ 50
[2] s.15, Advocates Ordinance (“AO”). The finding of the HC is in contrast with the provision of CIPAA (Section 8(3) of the CIPAA provides that parties to an adjudication proceeding “may represent himself or be represented by any representative appointed by the party”.
[3] Chaw G, “Statutory Adjudication in Malaysia and ‘Sabah Proceeding’: A Paradox”, [2021], 3 MLJ, p.10: the concept of a ‘seat’, which is part of the legal framework of arbitration law, does not exist in the law and practice of adjudication.
[4] ss 13, 15 and 16 CIPAA 2012
[5] a special law prevails over a general law

This article attempts to address a ‘celebration of diversity’ in our Malaysia-Day, where even the law seems to be given a different interpretation to achieve unity in diversity by the Federal Court in the recent judgement of Masenang Sdn Bhd v Sabanilam Enterprise Sdn Bhd [2020][1], that has resulted in a tug-of-war of conflicting judgements between the HC in Kuala Lumpur and that of the HC of Borneo (“the conundrum”). To resolve this issue once and for all, the Federal Court holds that foremost, “The seat of a domestic arbitration cannot simply be said to be Malaysia. The seat is usually specified to be, for example, Kuala Lumpur, Malaysia, or Kota Kinabalu, Malaysia, or Penang, Malaysia, as the parties see fit to choose in their arbitration agreement or as determined by the arbitral tribunal pursuant to section 22 AA[2]”[3]; second, “the regulation and supervision of domestic arbitration is NOT governed by the law governing civil disputes such as the CJA which determines jurisdiction by ascertaining where the cause of action arose.[4] It is the AA and arbitral law that governs this issue even in domestic arbitrations”[5]; third, “the theory of the juridical seat is in point of fact directly relevant and essential in domestic arbitrations”[6]; and fourth, “[…]the seat of a domestic arbitration is in Kuala Lumpur [falls within] the jurisdiction of the High Court in Malaya, the High Court in Sabah and Sarawak enjoys concurrent jurisdiction to regulate that proceeding […] would not be the correct position in law [the AA] recognises that the supervisory court is the court at the seat of the arbitration. No such contravention or conflict with Art 121 of the Federal Constitution[7] can arise”[8].

In a nutshell, the finding of the court consistent with the arbitration law adopted by the ADR-community, that court will find in favour the ‘supervisory-court’ that follows the ‘judicial-seat of arbitration’ (‘seat’) agreed by the parties[9] or determined by the arbitrator, when the seat is not determine. However, the novelty of the findings of the FC in contrast with that of the Court of Appeal, is that the seat applied to domestic arbitration has to be clearly stated as to the ‘place of arbitration’ i.e., Kuala Lumpur, Sabah or Sarawak. This imply that the application of ‘private international law (‘PIL’)[10] in international commercial arbitration and to some extend of ‘forum non conveniens’[11] is applicable, a basis that the Appeal Court denounce the issue of the seat as irrelevant in domestic arbitration, as both the states of Malaya and Borneo, are under Malaysia and both share the same jurisdiction, including that of AA 2005. On the onset, this may look like ‘hair-splitting’ legal arguments to the minute-details that defied logic, but the intention is noble, that is to avoid a repeat of such conundrum.

Unlike the jurisdiction of the United Kingdom (‘UK’), Scotland is an entirely different jurisdiction, adopting the civil-law approach, as compared to England and Wales (‘EW’), with its common-law approach. Therefore, a domestic arbitration seated in Scotland is entirely different from one that is seated in EW. Both jurisdictions employed a different set of arbitration law, namely, Scotland with its Arbitration (Scotland) Act 2010, adopted the UNCITRAL Model-Law, while EW, the Arbitration Act 1996 (of England), that has more provision compared to the Model-Law. Thereupon, it makes sense as to state the actual place of arbitration in the English context, but for Malaysia, as a jurisdiction, that will be a novelty.
​
As it is, the finding and judgement of the Federal Court is binding. I can’t help to acknowledge myself as Malaysian yet is different from my counterpart in Sabah and Sarawak. Perhaps such is what it meant by ‘unity in diversity’. Happy Malaysia-Day, we are One ‘Diverse-Family’.

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[1] Federal Court Civil Appeal No.: 02(i)-20-03/2020(S)
[2] Arbitration Act 2005: Seat of Arbitration
[3] Op-cit, para 185
[4] Ibid, para 140: “Applying the well- known Latin maxim of generalia specialibus non derogant, a special law prevails over a general law”
[5] Ibid, para 170
[6] Ibid, para 169
[7] Article 121: […] (a) one of the States of Malaya, which shall be known as the High Court in Malaya and shall have its principle registry in Kuala Lumpur; and (b) one in the States of Sabah and Sarawak, which shall be known as the High Court in Borneo and shall have its principle registry at such place in the States of Sabah and Sarawak […].
[8] Federal Court Civil Appeal No.: 02(i)-20-03/2020(S), para 136
[9] Conforming to the principle of party autonomy.
[10] Conflict of laws
[11] Another forum or court is more appropriate to hear the case
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CAN A NON-INDEPENDENT ARBITRATOR ACTS INDEPENDENTLY?

5/15/2021

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​CAN A NON-INDEPENDENT ARBITRATOR ACTS INDEPENDENTLY?

Postscript: An interesting paper shed some lights on the subject of ‘independence’, a rarely explore subject in the field of arbitration.[1] It states, the requirements for impartiality has been enshrined in ICC-Rules[2], LCIA-Rules[3], UNCITRAL-Rules[4], UNCITRAL-Model Law[5], AAA-Construction Industry Arb. Rules[6], IBA-Rules on Ethic[7], IBA-Guidelines on Conflicts[8], ICSID-Rules[9] and also the Malaysia Arbitration Act 2005[10]. Interestingly the UK arbitration Act 1996 is silence on this provision of being, ‘independent’ and the question is why? Such omission is deliberate as in the ‘DAC Report’[11], ‘[Inclusion] of independence would give rise to endless arguments […] almost any connection (however remote) has been put forward to challenge the ‘independence’’.[12] This shows that the term, independent and impartial ought to be distinguished.[13] The dictionary prescribed, independent as, ‘free from outside control’.[14] Challenge on the notion of ‘independence’ has been diverse, i.e. conflict of counsel and the nominated arbitrator[15], in a personal injury case where the recorder is in conflict with both counsels[16] and the classic case of Porter v Magill[17].

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[1] Stuart Allen, Barristers’ Chambers in England and Wales: The Role of Impartiality and Independence in International Arbitration, LLM,RGU[2018]
[2] Art.11(1),ICC[2017]
[3] R.5.3,LCIA[2014]
[4] Art.6(7),UNCITRAL-Rules[2013]
[5] Art11(5),UNCITRAL-ML[2006]
[6] R-20,AAA[2015]
[7] R.3,IBA-Ethics[1987]
[8] Pr.1,IBA-Conflicts[2014]
[9] R.6,ICSID-Rules[2006]
[10] S.14(1) Malaysian Arbitration Act 2005 (AA)
[11] Julian, Loukas, Stefan, Comparative Commercial International Arbitration (1st ed. Kluwere Law Arbitration 2003),p.255-273
[12] Lord Justice Saville, ‘DAC on Arbitration Law 1996 Report on Arbitration Bill’[1997] 13(3)102
[13] Op-cit,(n.10)
[14] Oxford Dictionary (3rd.ed.Oxford University Press 2018)
[15] Brescia Calcio SpA v West Ham FC Plc [2012] ISLR, SLR40; ICC Case No.1653/GZ
[16] Smith v Kvaerner Cementation Foundation [2006] EWCA Civ 242
[17] [2001] UKHL 67

Neutrality, independence and impartiality, the three key criteria of dispute resolutions be it arbitration, adjudication, determination or mediation. Various attempt has been made to clarify the positions of these criteria, but the notion of independence herewith is given a different perspective as to: what is the meaning of independence? Can a person who is not independent acts independently? If so, can a decision by an arbitrator who is not independent be challenged?

Definition given to ‘independence’ are generally referred to private, professional or business-related relationships of the arbitrator to the parties or counsels involved in the arbitration[1];  “likely to give rise to justifiable doubts”[2]; Whereas an independent arbitrator is one who does not have any type of personal and/or employment relationship, needed to ensure that justice is seen to be done[3]; Independence refers to objective and external manifestation of the relationship between the parties, counsels and co-arbitrators[4]; and  shall not only be independent but he shall also be perceived as independent by third parties[5].

The standard of independence however, is subject to the institution’s rules or the seat of the arbitration but generally, common law jurisdiction will follow the English position of “the real danger of bias” test which are very specific.[6] Thus, the question of independence and bias boils down to, can a person who is not independent acts independently?

Who is a person deemed not independent? In this context, can a person under an employment of another person be deemed independent? Unlikely so, because this person under employment is constantly under the influence of the employer, via the employment agreement, bound in some jurisdiction under the Employment Act. There is no obligation for the employer to make any disclosure to its employee, thus how can an employee in this instance, and in return, has sufficient knowledge to make any disclosure, while acting as an arbitrator without risking the “real danger of bias” implication? Even if the employer has consented, it will be very subjective through a third-party perspective that such an employed arbitrator can discharged its duty independently.

If so, can a decision by an arbitrator who is not independent be challenged? The law holds that a person who is approached in connection with that person’s possible appointment as an arbitrator shall disclose any circumstances likely to give rise to justifiable doubts as to that person’s impartiality or independence.[7] An arbitrator may be challenged only if, the circumstances give rise to justifiable doubts as to that arbitrator’s impartiality or independence.[8]

In summary, it is important for institution administered arbitration, to make sure not only a declaration is made that the potential arbitrator could discharged its duty independently, it must also confirm that the arbitrator is independent, unlikely to be under an employment of any private entities, as the rule under the “real danger of bias” test is also held in Malaysia.[9]

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[1] <https://www.ciarb.org/resources/features/independence-and-impartiality-of-arbitrators/>: Bruno Manzanares Bastida, ‘The Independence and Impartiality of Arbitrators in International Commercial Arbitration from a Theoretical and Practical Perspective’ (2007) 6 Revist@ e-mercatoria 1, 3 < https://ssrn.com/abstract=1491528> accessed 5 April 2012
[2] Model Law generally follows the IBA Guidelines: Nathalie Bernasconi-Osterwalder, Lise Johnson and Fiona Marshall, ‘Arbitrator Independence and Impartiality: Examining the Dual Role of arbitrator and counsel’ (2011) International Institute for Sustainable Development (IISD) 12 < http://www.iisd.org/pdf/2011/dci_2010_arbitrator_independence.pdf > accessed 5 April 2018.
[3] <https://globalarbitrationnews.com/the-double-requirement-that-the-arbitrator-be-independent-and-impartial-20150227/>
[4] Malintoppi, L., Part III Procedural Issues, Chapter 20 - Independence, Impartiality, and Duty of Disclosure of Arbitrators, in Muchlinski, P. T., Ortino, F. and Schreuer, Ch. (eds.), The Oxford Handbook of International Investment Law, 2008, p. 807
[5] < https://jusmundi.com/en/document/wiki/en-arbitrators-impartiality-and-independence>
[6] <http://www.davidyek.com/adr/lessons-on-arbitrals-impartiality-halliburton-v-chubb>: Halliburton v Chubb[2020]UKSC48: the ‘real possibility of apparent bias’ by Lord Hodge
[7] S.14(1) Malaysian Arbitration Act 2005 (AA)
[8] S.14(3)(a)AA
[9]  Low Koh Hwa @ Low Kok Hwa (practising as sole Chartered Architect at Low & Associates) v Persatuan Kanak-Kanak Spastik Selangor & Wilayah Persekutuan and another case [2021] MLJU 430
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​THE THREE-TENETS OF ARBITRATION, WHICH HELD SUPREME?

5/5/2021

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​THE THREE-TENETS OF ARBITRATION, WHICH HELD SUPREME?

Some issues in arbitration that warrant some answers as to the question of party autonomy to agree on an ‘asymmetrical arbitration clause’ or an ‘unilateral option clause’ UOC, allowing one party rights to commence litigation; the question of independence and impartiality when a member of the tribunal was found to be in the apparent conflict with a witness of opinion called by the party; and the question of public policy where an award is rendered unenforceable arising from a sanction levy upon the country where the assets are located. These issues went to the ‘core tenet’ of arbitration being, party autonomy; independence and impartiality; and public policy rule. Which of these should take precedent over the other?

An ‘asymmetric-clause’ is a ‘one-sided agreement’ allowing one party ‘option to choose’ dispute resolution mechanism to self-advantages; contains therein the ‘unilateral option clause’ UOC, granting one party right to elect between arbitration or litigation, i.e, “[…] shall have the right to refer any dispute […], to a competent court in […] or any other competent court in any other country at […] sole discretion.” The criticism is obvious, as it lacks a ‘level playing field’, impeding into the equalities of the party to be heard, thus from an act of party autonomy to the obstruction of natural justice, commonly employed by specific industries i.e. banking and the construction sectors; contrast to the nature of arbitration to have ‘finality’ only to be reviewed by another court of competent jurisdiction; and promote the idea of ‘forum shopping’. Courts between common-law and civil-law are divided, i.e. UK[1], Hong Kong, the UAE[2] and Singapore[3] recognises UOC whereas Russia[4] (issued a Digest[5]) and France[6] rejected UOC outright, thus it is now a question of public policy versus party autonomy, which remains supreme over the other? In the lacked of a consistent approach, party autonomy principle is not entirely absolute as it has to be view against the principle of public policy, as in the case of equality, public policies shall then take precedent.

Common that in a three-member tribunal, one party may raise a concern that an witness of opinion appointed by the other party must be excluded by the tribunal as the witness of opinion concerned was once a partner to a member of the tribunal thus the issues of conflicts and impartiality of the tribunal is now, in question. The criticism is one cannot just keep changing the member of the tribunal simply by introducing a witness of opinion that has conflict with any member of the tribunal, notwithstanding that the sole witness of opinion is the most unique available in the industry, such may not discount any attempt to employ ‘guerrilla tactics’ to derail the arbitration. Tribunal is confronted with the issues of impartiality versus natural justice, which held supreme?  Impartiality has always been the cornerstone to the dispensation of justice.[7] The law holds, threefold tests of bias, actual, imputed, apprehended or apparent bias. Actual bias is difficult to proof; imputed bias, once presented, will void the submission without proof of investigation into its likelihood or suspicion of bias; and apparent bias, is where a reasonable-public could harbour a reasonable-suspicion of bias[8] and there is a sufficient degree of possibility of bias[9]. There is little clarity on this as such the IBA Guidelines on Conflict, has provided Lists to categorically measure the degree of ‘conflicts’ but without the application of ‘case-specific judgment’, it remains just as ‘guidelines’ or ‘soft laws’. The recent case law[10] shed some lights where court set aside an award on the basis of arbitrator apparent bias, in conflict with public-policy, breaching the rules of natural-justice. The court holds, the arbitrator must, statutorily, make full and timeous disclosure, which are likely to give rise to justifiable doubts as to the arbitrator's impartiality or independence, which would enable a 'fair-minded and informed observer' to decide objectively on whether there are justifiable doubts on the arbitrator's impartiality and/or independence. Therefore, considered that impartiality has always been the cornerstone to the dispensation of justice, tribunal would just have to consider the expert opinion just liked any other ‘witness’ and to draw its own conclusion as to the reliability of such ‘opinion’ and on such, the question of ‘independent and impartiality’ does not really surface.[11]

With regard to sanction as public policy, two distinctive issues, one ‘non-arbitrability doctrine’[12] with regard to which law to apply in challenging the validity of the award? Second, the validity of sanction making an arbitration inarbitrable.[13] Arbitrability, ‘involves …types of issues can and cannot be submitted to arbitration’[14]; viewed as ‘objective’, matters can be arbitrated; and ‘subjective’, who can resort to arbitration[15]. ‘Inarbitrability’, can challenge enforcement of arbitral award[16]; public policy as basis of inarbitrability; fundamental to comply[17], tribunal must consider which lex arbitri, substantial law[18] or lex fori[19], applicable[20]? Sanctions are temporary restrictive, whereas public policy fundamentally legal-principles, stable to political changes.[21] When sanction was imposed, binding only if parties could have known that they would be subjected to this rule, otherwise, they might selected another law, in which sanction would give effect only if they satisfied the conditions external to the applicable-law. Thus, public policy ultimately overrides party autonomy as to choose which forum as preferences.  

On such account, among the three-tenets of arbitration, very likely that the following shall be the order of priority, independence and impartiality; public policy; and party autonomy.
 
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[1] NB Three Shipping v. Harebell Shipping [2004] EWHC 2001 (Comm); Deutsche Bank v. Tongkah Harbour [2011] EWHC 2251 (QB)
[2] A3 v B3 [2019] ADGMCFI 0004: citing Pittalis v Sherrefettin [1988] 2 All ER 227
[3] Hong Kong Court of Appeal ([2001] 3 HKC 580) and decision by the Singapore Court of Appeal ([2017] SGCA 32).
[4] Sony Ericsson v Russia Telecom [2012] No.1831/12
[5] <http://arbitrationblog.kluwerarbitration.com/2019/05/07/unilateral-option-clauses-russian-supreme-court-puts-an-end-to-the-long-lasting-discussion/>
[6] UOCs also applied the Brussel I Regulation and the Lugano Convention. Arbitration agreements and therefore UOCs to arbitration are outside the scope of the Lugano Convention, Brussel I Regulation and its successor, Recast Brussels Regulation; The Rothschild Case [2012] No 11-26.022;
[7] R v Sussex[1924] 1KB256; Findlay v UK[1997] 24EHRR221; W v M[2016] EWHC422(Comm)
[8] R v Gough[1993] AC646
[9] Porter v Magill[2001] 1UKHL67; Re Medicaments(No.2)[2001] 1WLR700
[10] Halliburton v Chubb[2020]UKSC48
[11] World Duty Free Co. v Rep. of Kenya ICSID Case No. ARB/00/7; R v Alex Julian Pabon [2018] EWCA Crim 420.
[12] Gary B.Born, International Commercial Arbitration (Born, 2nd Ed.) p.243.
[13] <http://arbitrationblog.practicallaw.com/implications-of-economic-sanctions-on-international-arbitration>: some scholar opined that disputes involving economic sanctions are ‘arbitrable’
[14] Loukas A.Mistelis and Stavros L.Brekoulakis, Arbitrability: International and Comparative Perspectives, Int.Arb.Law.Lib.Vol.19 (Mistelis and Brekoulakis), pp.3&4, para.1-6.
[15] Emmanuel Gaillard and Domenico Di Pietro, Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice (Cameron, 2008 Ed.), p. 503.
[16] Karl-Heinz Bockstiegel, Public Policy and Arbitrability, in Pieter Sanders (ed), Comparative Arbitration Practice and Public Policy in Arbitration, ICCA Congress Series, Volume 3 [Bockstiegel], p. 178: MODSAF v IMS [2001] EWCA Civ 145
[17] George A.Bermann, Introduction: The Origin and Operation of Mandatory Rules, in Mandatory Rules in International Arbitration (Bermann & Mistelis Ed.2011) p.4.
[18] Melli Bank v Holbud Ltd  [2013] EWHC 1506 (Comm); DVB Bank SE v Shere Shipping Co Ltd [2013] EWHC 232
[19] Art.V(2)(b)ML: allows the refusal of enforcement when enforcement would be ‘in contrary to the public policy of that country’; Westacre Investments Inc v. Jugoimport-SDRP Holding Co Ltd [1999] EWCA Civ 1401
[20] Bockstiegel, pp. 184 and 185.
[21] Semanya v IFFA [2018] 4A 318/2018
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MY MEDIATION LOG BOOK: ‘CRACKING’ A JOINT VENTURE

4/19/2021

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MY MEDIATION LOG BOOK: ‘CRACKING’ A JOINT VENTURE

Fortunate for the past months, after lifting of the MCO, I had just completed another round of mediation between a contractor and a premise owner whom property has been severely damaged on account’s of the contractor’s work of excavating a huge basement, resulted in heavy soil erosion.

The legal rights of the parties were set aside to explore needs. Through an evaluative nature, my input as an expert-mediator in the construction sectors had negotiated for one party that it is simply a waste of time, repairing the existing structure in view that, one, the land value is more expansive than the structure itself, two, the design of the building has exceeded its relevant and dis-economy of scale... it is more appropriate to actually redevelop the entire premises into multi-storey structure.

On the other party, the negotiation was central upon a collaborative partnership to jointly redevelop the land, with a portion to be given in-kind while the rest as profit sharing. The landowner will contribute its land while the contractor to contribute building the entire structure. As for the consultants, it will naturally to be considered...

The parties agreed on the suggestions and mutually agreed on the terms as in a MOU, pending further deliberation on its details... as you can see mediation leads to future cooperation, not a zero sum games of dispute resolution. Will continue with another story on mediation done, in an ad-hoc basis. At the moment, institutionalize mediation was rather at the back burner due to non incentive given by the respective parties whom aims are litigation and dispute resolutions... this is one area, Architect has an active role to play.
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CPC, CFO/CCC, VP CONUNDRUM

4/15/2021

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​CPC, CFO/CCC, VP CONUNDRUM

Back in 2018, a construction lawyer posed to me a question, “how the Architect can certifies certificate of Vacant-Possession (VP) without first issuing the certificate of Practical-Completion (CPC)?” Apparently many people is confuse with the salient differences between these, CPC, Certificate of Fitness for Occupation (CFO), Certificate of Completion and Compliance (CCC) and VP.
 
Foremost, the lifecycle of project ends ‘contractually’ with a CPC, which is easier to recognise than define, no hard and fast rules; existence of latent (unknown) defects cannot prevent practical completion, defects are d’minimis; in relation to patent defects, there is no difference between uncompleted items of work and an item of defective work that requires to be remedied; 'trifling' patent defects does not preclude practical completion; whether an item is 'trifling' is a matter of fact and degree to be measured against the intended purpose of the works; and mere fact that a defect is irremediable does not mean that works are not practically complete.[1] A CPC is a demarcation of a completion within the construe of a construction contract, as provided by the standard form of contract.[2] Practical-completion and its variant is a termed used also in other international forms.[3]
 
Second, the lifecycle of project ends ‘statutorily’ with a CFO/CCC[4], which is objectively done by ‘self-certification’ and issuance of the Borang-F, upon completion of inspection and submission to the relevant authorities. This is a closure of a statutory-undertakings that building has been constructed in accordance to the approved-plans (drawings). Here, the principal submitting person undertakes statutory liability of the entire building for live.[5]
 
Third, issuance of CFO/CCC is a condition precedent to the issuance of certificate for VP[6], marking the handing over of vacant possession of housing to purchasers with water and electricity ready for connection. Collectively, these certifications are statutorily required under the law. Other certifications for issuance of Strata Titles and Share-Titles are also warranted, marking that the strata plans are in accordance to the approved-plans/drawings.[7]  
 
So, logically, by order of priority CPC have to be issued first, before the issuance of CFO/CCC and ends with VP. However, there is not statutory requirement for the issuance of CPC prior to issuance of CFO/CCC as these certifications operate under different conditions. Saying thus, there are events that CFO/CCC has been issued before CPC. The legal-question is whether issuance of CFO/CCC actually signify the completion of the said building, i.e. practical-completion? If so, whether CFO/CCC can replace CPC, or deemed CPC to have been issued?
 
Unfortunately, the short answer is ‘no’. CPC, although, ill-defined, remains the opinion of the Architect. CFO/CCC, on the other hands, is the undertaking of the Architect. The level of liability differs and the implication to the respective legislation also differed. Thus, one cannot equate CPC with CFO/CCC.
 
Back to our lawyer friend, in the heated debate, his face turned rosy when I say, ‘no’ … and we did finally ‘chilled-out’ in the ‘other-bar’. He remains one of our ardent supporter in PAM as ‘industrial-partner’ and occasionally maintain his construction-law in 2 minutes via youtube.  

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[1] Mears v Costplan [2019] EWCA Civ 502
[2] PAM Form of Building Contract, i.e. PAM1998, 2006, 2018
[3] JCTSBC2006: Practical Completion; FIDIC: Taking Over Certificate; NEC: Completion
[4] S.25; 25A, Uniform Building Bylaws 1984 UBBL
[5] Statute of Limitation or Longstop does not apply
[6] Third-Schedule G; H Cl.3, Housing Development (Control and Licensing) Act 1966 (HDA)
[7] S.9(1)(b)(i), Strata Title Act 1985; S.6(3), Strata Management Act 2013
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ADJUDICATION WITH THE SPANNER IN THE GEARBOX

3/17/2021

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​ADJUDICATION WITH THE SPANNER IN THE GEARBOX

CIPAA Adjudication is no longer a dispensation of ‘rough-justice’ in a ‘fast-and-furious’ way. The true intention of CIPAA to expedite dispute-resolution as to enable contractor’s its life-source, which is payment, is off-tangent, into a ‘mini-trial’ or ‘mini-arbitration’, where counsels can actually test its evidence and arguments before going for a ‘final-resolution’, without giving ample ‘arsenals’ for the adjudicator to work on its own ‘competenze-competenze’; for a fee, far below of that of arbitration or the counsel’s own retainer, especially when ‘hearing’ is accorded.
 
CIPAA was once known to be of 88%-success rate for the Claimant, usually contractor, not until the first ‘spanner was thrown into the gearbox’, that Respondent has the right to raise defence at any point in time during the progress of CIPAA.[1] Claimant has 5-days to put in its Reply, taking advantage of this, the tactical- maneuvering of an ambush with documents in the Response, during prolonged ‘holiday-seasons’, left very little time for Claimant to Reply. Does the matter stop at Reply? The answer is ‘no’… for most adjudicator may find that the entire Response is dedicated to a ‘single-objective’, to ‘remove’ the adjudicator for the lack of jurisdiction to preside over the adjudication. Thus, request for further submission i.e. rejoinder, sur-rejoinder, rebuttal and sur-rebuttal are requested. Will a rational adjudicator obliged to allow such, fearing ‘lack of natural justice’ disposition? Usually the adjudicator will give-in, eating into his 45-days to serve its Decision.
 
The story doesn’t ends there yet. There were attempt by counsel, usually Respondent, to seek for Hearing and Written-Submission.[2] Such call was turned down by the HC, keeping faithfully to the spirit of CIPAA, which is dispensation of ‘rough-justice’ in a ‘fast-and-furious’ way. Having said that, some Respondent will put in ‘Expert-Report’ as evidence, some by the cartons of A4-boxes, mirrored such as in arbitration or litigation, holding faithfully to View-Esteem’s ruling, in Response, Rejoinder and maybe Rebuttal. Should the adjudicator allowed for hearing to review these ‘Expert-Report’ evidence? That is like walking tip-toe at the tight-rope, requiring a fine-balancing act, fearing a breach of natural-justice.
 
Alas, the Appeal-Court has then, opens a flood-gate, rendering breach of natural-justice if the adjudicator does not allow Hearing and Written-Submission, on the basis of insufficient time.[3] The second spanner was thrown into the gearbox, swinging the pendulum to the Respondent, as with Hearing and Written-Submission, the chances voiding the entire CIPAA processes are very high. There is yet, procedural aspect of Hearing and Written-Submission in a conduct of adjudication available in the adjudicator’s tool-boxes, especially so when the notion of competenze-competenze is absent. The stroke of genius on tactical-maneuvering for a ‘weak-case’ is vested upon the conduct of Hearing and Written-Submission, to prolong the processes and along the way, to nail the adjudicator for prejudice.
 
Will the story ends here? Not likely. By this time, after serving the Claim, the adjudicator will more likely to call for a preliminary meeting, set the agenda for exchange of documents, fixing hearing dates and those procedural-rules that is common in arbitration, in place for adjudication which is a lacuna for a moment, for AIAC to pluck out the spanner from the gearbox. Wonder, is there additional adjudicator fee for hearing and such?   

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[1] View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2017] 1 LNS 1378:
​  <https://themalaysianlawyer.com/2018/09/05/cipaa-adjudication-leading-the-way>
[2] MRCB Builders Sdn Bhd v. Wazam Ventures Sdn Bhd & Another Case [2020] 1 LNS 145
[3] GuangXi Dev & Cap Sdn Bhd vSycal Bhd [2018] MLJU 1542
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THE SETTLE OF THE ‘UNSETTLED-LAW’ IN CIPAA AS AT 2020

1/20/2021

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​THE SETTLE OF THE ‘UNSETTLED-LAW’ IN CIPAA AS AT 2020

CIPAA apply prospectively[1] with “conditional-payment” enforceable for contract prior 15th April 2014[2]; not to be “contracted-out”[3]; rarely granted “stay of adjudication” unless for specific “narrow-reasons”[4] i.e. res-judicata[5] or pre-qualify for stay requires commencement of arbitration/proceeding[6]; zerorising Respondent’s claim[7]; “non-certified”[8] claims allowed; exempting government as disputing-party[9] but exclude item not of  “national-security”[10]; consultancy-contract can be adjudicated[11] including final-account[12]; setting-aside under s.15[13] includes in-existence of an arbitration-award/judgement[14]; allow new defences post payment-response[15]; must accorded “hearing”, failing which “breach of natural-justice”[16]; no-appeal on “ground of law”[17], even there is an “error of law”[18]; exclude shipping[19] and mining[20] contract, but a platform-anchored into the land, is adjudicate-able[21]; estoppel of party participated fully to raise any-objection on adjudicator’s-appointment[22]; constitutionality of CIPAA upheld[23]; rights to limit extension-of-time for submission[24], including adjudicating-EOT as “contingent jurisdiction”[25], and L&E[26]; allowing claims of “pre-award” interest[27], only if such is claimed[28]; non-mandatory for decision to be registered prior serving ‘winding-up’[29], but cautionary apply to company on “disputed-debts”[30] owing to its “temporary-finality”[31]; non-interference of court to “vary adjudication-decision”[32], awarding-costs[33] nor “supplanting” adjudicator’s-order[34]; and mandatory for principal to pay[35].

----------------------------------------------------
[1] Jack-In Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2020] 1 CLJ 299
[2] Jack-In Pile [2020]
[3] Ranhill E&C Sdn Bhd v Tioxide [2015] 1 LNS 1435
[4] Subang Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 11 MLJ 818
[5] Samsung C & T Corporation & Anor v Bauer (Malaysia) Sdn Bhd [2019] MLJU 1690
[6]  Foster Wheeler E & C (Malaysia) Sdn Bhd v Arkema Thiochemicals Sdn Bhd Anor [2015] 1 LNS 632; Punj Lloyd Sdn Bhd v Ramo Industries Sdn Bhd & Anor and another case [2019] 11 MLJ 574
[7] Tenaga Poly Sdn Bhd vs Crest Builder Sdn Bhd (unreported)
[8] Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] 8 CLJ 728
[9] Mudajaya Corporation Bhd v Leighton Contractors (M) Sdn Bhd [2015] 5 CLJ 848
[10] ENRA Engineering and Fabrication Sdn Bhd v Gemula Sdn Bhd & Another Case [2019] 10 CLJ 333
[11] Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Case [ 2017] 1 CLJ 101 
[12] Martego [ 2017]
[13] Wong Huat Construction Co v Ireka Engineering & Construction [2018] 1 CLJ 536 
[14] Prestij Mega Construction Sdn Bhd v Keller (M) Sdn Bhd & Other Cases [2019] 1 LNS 1612
[15] View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2017] 8 AMR 167
[16] Guangxi Dev & Cap Sdn Bhd v Sycal Bhd & Anor Appeal [2019] 1 CLJ 592
[17] VVO Construction Sdn Bhd v Bina MYK Sdn Bhd Anor [2017] 2 AMR 502
[18] SKS Pavillion Sdn Bhd v Tasoon Injection Pile Sdn Bhd [2019] MLJU 1051
[19] MIR Valve Sdn Bhd v TH Heavy Engineering Berhad & Other Cases [2017] 8 CLJ 208
[20] YTK Engineering Services Sdn Bhd v Towards Green Sdn Bhd [2017] 5. AMR 76
[21] E.A Technique v Malaysia Marine and Heavy Engineering [2020] WA-24C-96-06/2019
[22] Zana Bina Sdn Bhd v Cosmic Master Development Sdn Bhd [2017] MLJU 146
[23] Amerin Residence Sdn Bhd v Asian International Arbitration Centre ([2019] 1 LNS 904; Mega Sasa Sdn Bhd v Kinta Bakti Sdn Bhd & Ors [2019] MLJU 1043; [2019] 1 LNS 1366
[24] Binastra Ablebuild Sdn Bhd v JPS Holdings Sdn Bhd and another case [2017] MLJU 1260
[25] SKS Pavillion Sdn Bhd v Tasoon Injection Pile Sdn Bhd [2019] 2 CLJ 704
[26] Syarikat Bina Darul Aman Bhd & Anor v Government of Malaysia [2017] MLJU 2381
[27] Milsonland Development Sdn Bhd v Macro Resources Sdn Bhd  [2017] MLJU 169
[28] Naza Engineering & Construction v SSL Dev [2019]
[29] Bina Puri Sdn Bhd v Likas Bay Precinct Sdn Bhd [2018] MLJU 864
[30] Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd [2020] MLJU 1196
[31] ASM Development  v Econpile [2019] WA-24NCC-363-07/2019
[32] Naza Engineering & Construction v SSL Dev [2019]
[33] TRT Engineering (M) Sdn Bhd v Hansol KNM Greentech Sdn. Bhd [2020] 1 LNS 8
[34] Multazam Development Sdn Bhd v Felda Global Ventures Plantations (M) Sdn Bhd [2020] 11 MLJU 606
[35] CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2020] 1 CLJ 75
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    DYA+C is set up by Ar. DAVID YEK TAK WAI to undertake resolution of commercial disputes through ARBITRATION and ADJUDICATION, specializing in CONSTRUCTION PAYMENT DISPUTES.

    This is an educational blog. We do not guarantee, confirm nor warrant the accuracy of the information and facts stated therein. Read at your own 'risk'.

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