THE SETTLE OF THE ‘UNSETTLED-LAW’ IN CIPAA AS AT 2020CIPAA 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
0 Comments
Postscript: An update that the Halliburton Test is also applied to CIPAA’s Adjudicators test of ‘apparent bias’[1] in a setting aside attempt[2], where the court held that the first rule of natural justice “overlaps with” but is “distinct from the Duty to be Impartial”[3], to include, the “real danger of bias” test (“Real Danger Test”) and the “real possibility of bias” test (“Real Possibility Test”)[4]. ------------------------------------------------------------------------------------------------------------------------ [1] Rosha Dynamic Sdn Bhd v Mohd Salehhodin bin Sabiyee & Ors and other cases [2021] MLJU 1222 [2] S 15 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA) [3] “fair-minded and informed observer” [4] Bar Council v Tun Dato Seri Arifin bin Zakaria & Ors [2020] 4 MLJ 773 LESSONS ON ARBITRAL’S IMPARTIALITY – HALLIBURTON v CHUBBHaving now a local case employing Halliburton v Chubb on arbitrator bias and duty of disclosure, I had revamped my article that I wrote earlier this year in January, 19th.
In Halliburton v Chubb, the legal-test that applies to duty of disclosure[1], even if “real-possibility of bias”[2] not established on facts, duty of disclosure[3] arises as-if it might "reasonably" give-rise to doubt[4]; assessment of “possibility of bias”[5] following disclosure, should be applied through the perspective of "fair-minded[6] and informed-observer"[7], in "realities of international-arbitration" context[8] and "custom and practice in the relevant-field of arbitration", i.e. provided no-breach of confidentiality[9], yet to provide as much information that if you can't disclose[10], otherwise arbitrator “must-resign”[11]; and failure to disclose[12] is that, observer can assess whether there is a “real possibility of bias”, be made at hearing-date to “remove the arbitrator”, and not at the arbitrator's acceptance-date of subsequent appointment. In 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, the court set aside an award[13] on the basis of arbitrator apparent bias[14], 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[15]; estoppel cannot be relied if the applicant fails within the time-bar objection[16] when an arbitrator failed to give ‘full and timeous’ disclosure, statutorily imposed[17]; and impacted the award as the arbitrator "would have reached a different decision if not for the [failure to make full and timeous disclosure]" Concluding, the Malaysian case did not concern multiple appointment as per Halliburton. It is significant that the applied principles determine the extent of an arbitrator's duty of disclosure and set threshold for setting aside an award for apparent bias. The court acknowledged the difficulty in proving ‘apparent bias’ yet it sends signal to arbitral institution not to only limit their panel of arbitrators to a small significant number, i.e. less than 20, when the disputing parties in the construction industries are limited.[18] ------------------------------------------------ [1] S.24(1)(a)1996Act [2] Porter v Magill[2001] 1UKHL67; R v Gough[1993] AC646: bias is met as long as the court is satisfied that there is a sufficient degree of possibility of bias. [3] Davidson v Scottish Ministers(No 2)[2004]UKHL34:a legal duty of disclosure in s.33,1996Act [4] R v Sussex[1924] 1KB256 at 259:justice should not only be done, but be seen to be done; Findlay v UK[1997] 24EHRR221:tribunal must be subjectively free from personal prejudice, be impartial from an objective viewpoint; W v M[2016] EWHC422(Comm) [5] R v Gough[1993] AC646:real likelihood/danger of bias test; Re Medicaments(No.2)[2001] 1WLR700 [6] Helow v Secretary of State Home-Department[2008]UKHL62:observer not-judge on any-point before acquiring full-understanding of both sides. [7] Porter v Magill[2001]UKHL67:“The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.”; Johnson v Johnson (2000)201CLR488:fair-minded and informed-observer is “neither complacent nor unduly sensitive or suspicious”. [8] A v B [2011]EWHC 2345(Comm); ASM Shipping v TTMI[2005]EWHC2238(Comm):requirement in English law that all arbitrators, appointed, comply with the same high-standards of impartiality, appears to be accepted as the legal-norm internationally. [9] Dolling-Baker v Merrett[1990]1WLR1205(CA); Ali Shipping v Shipyard Trogir[1999]1WLR314; Development of City of Moscow v Bankers Trust[2004]EWCACiv314:English-seated arbitrations are both private and confidential. [10] Halliburton v Chubb[2020]UKSC48:arbitrator’s obligation of confidentiality which prevent disclosure, is an unsettle law and case-sensitive. [11] AWG v Alexander Fraser[2005] EWHC2786(Ch); TM v. Ghana[2003] PCACaseNo.2003-03 [12] PAO Tatneft v Ukraine[2019]EWHC3740(Ch):failure of disclosure may then be a factor to establish justifiable doubts as to the arbitrator’s impartiality. [13] S.37 Malaysian Arbitration Act 2005 (MAA 2005): award may be set aside […] if - (i) a party […] was under any incapacity [14] S.14 MAA 2005 [15] Halliburton v Chubb[2020]UKSC48: the ‘real possibility of apparent bias’ by Lord Hodge [16] S.15(1) MAA 2005 [17] S.14(1) and (2) MAA 2005 [18] Reported in PAM annual report 2020/2021, p.40: 13 nos. as per Dec 2020 PAM-PRACTICE NOTES 3-2020, MY POINT OF VIEW… Update: I wrote this article way back in January 2021, as a response to PAM’s Practice Advisory No.3 on Contract Administration by the Architect should also include ultra vires obligation such as re-negotiating contracts for the parties. The findings of KL Eco City Sdn Bhd v Tuck Sin Engineering & Construction Sdn Bhd & Anor[1], ultimately seals the fate of the Architect not to move beyond its obligation under the contract. YA Dato Lim Chong Fong holds: “[46] Unless actual authority is conferred, the architect as agent of the employer in a construction contract generally does not have the ostensible authority to waive the contractual rights of the employer in respect of conditions precedent such as on notice requirement as held in City Inn Ltd v Shepherd Construction Ltd (supra). Actual authority can be specifically conferred where expressed in the construction contract; see Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989][2]. There is however no waiver provision found in clause 23 of the PAM Conditions.” “[47] In the premises, I find and hold from the evidence adduced that the Architect did not have either actual or ostensible authority to waive the condition precedent set out in clause 23.1(a) of the PAM Conditions.” On this instance, the HC held that the Architect must always maintained its role as the Employer’s Agent and an impartial certifier to the Contractor and must never attempt to change the conditions of the contract, i.e. by acting ‘lenient’, to waive and by any means that will be taken or construed as changing the terms of the contract breaching the fundamental of parole evident rules. Under this basis, PAM’s Practice Advisory No.3 has ‘grossly erred’ and required immediate retraction and amendment. ----------------------------------------------------- [1] [2021], second trench judgement to KL Eco City Sdn Bhd v Tuck Sin Engineering & Construction Sdn Bhd & Anor [2020] 1 LNS 360 [2] 3 MLJ 126 and [1991] 2 MLJ 70 CA PAM has taken a bold step to invite both current presiding judges of the High Court and Federal Court, YA. Dato’ Lim Chong Fong (HCJ) and YA. Dato’ Mary Lim Thiam Suan (FCJ) to moderate a public forum - ‘Surviving Post Covid-19 – A Common Sense Approach’.[1] In the said forum, I am attracted by the PAM Past President, Datuk Ar. Tan Pei Ing’s revelation on the ‘PAM-Advisory’, now made available to members as PAM-Practice Notes 3-2020.[2] The question remain is whether such an advisory, mandating the Architect as contract administrator CA, to facilitate parties to the contract to ‘alter’ their contract, doubling up as a ‘contract-negotiator’ to re-negotiate their existing-contract, to account for the Covid-19 scenario? Let’s investigate further what the ‘advisory’ says. One, PAM contract has existing ADR clauses that parties can utilise. What is most surprising is – ‘the mediation process can be lengthy and costly’ … it means to say, PAM’s mediation are ‘lengthy and costly’? Or mediation, in general are ‘lengthy and costly’?[3] Both the Covid-19 Mediation Scheme and the AIAC is offering pro-bono mediation scheme, how costly can that be? Furthermore, it usually takes a few days (the most, 2-days), to sort out a mediation session, beyond that is simply futile. There must be basis and justification to state as to why mediation are ‘lengthy and costly’? Second, in the ‘advisory’, the CA/Architects should (rather meaning, shall being mandatory), ‘take a practical approach to mitigate dispute’. What is mean by ‘practical approach’? An ‘illegal-approach’, i.e. ultra-vires approach, can also be practical. What is ‘mitigating-dispute’? Dispute-avoidance or dispute-resolution? The latter is provided for in the contract, while the former is entirely something-else, implied rather than expressly provided for in the contract. When read together with BIPC joint advisory notes, ‘consultants are encouraged to […] facilitate […] explore options […] balance their respective interest […]’, meaning to assist parties in ‘renegotiating’ their contracts on a ‘good-faith’ basis. Also note the use of the word ‘encourage’, i.e. non-mandatory, as compared to PAM-Advisory, uses of the term ‘should’. Again, the PAM-Advisory mandated that ‘Architects should encourage contractual parties […] with the objective of preserving common-interest as opposed to insisting on strict contractual-rights’.[4] As to how one defines, ‘objective of preserving common-interest’ as ‘good-faith’ is a matter of parties’ discretion but to insist on Architects to ‘opposed to insisting on strict contractual-rights’, is absolutely, uncalled-for, or to put it in another words, architect ‘must’ unilaterally act ultra-vires as a matter of ‘practicality’? This is where the ‘trouble will arise’, for architects … ------------------------------------ [1]<https://www.facebook.com/events/391034642337065/?acontext=%7B%22event_action_history%22%3A[%7B%22mechanism%22%3A%22search_results%22%2C%22surface%22%3A%22search%22%7D]%7D> [2] <https://drive.google.com/file/d/1b4q4fNC3gj3godY9XZdtBqSZicVZGD2q/view> [3] PAM-Practice Notes 3/2020, p.1 [4] PAM-Practice Notes 3/2020, p.2 The position in law is Good faith, best endeavours and fair dealing - In many legal system, law of obligation recognises that contract has to be formed in bona fide i.e. ‘good faith’, but not with the English law.[1] Some cases may have been held against mala fide i.e. ‘bad faith’.[2] English law do not recognise, the contracting party has to act in good faith.[3] As to the reason why, traditionally, contract starts from ‘rugged individualism’, parties had to look after themselves in striking a bargain.[4] English law prefers to develop incrementally and a ‘broad general principle’ would generate too much uncertainty. Effect should therefore be given to expressly assumed obligations to act in good faith.[5] Such as an ADR clause requiring party to seek resolution in good faith.[6] A duty of good faith has to be expressly stated to be enforceable.[7] With court support.[8] However, in recent cases, English law has been seen to be ‘hostile’ towards the doctrine of good faith, although attempt to recognise such doctrine is intrinsically driven. [9] Without reliance to such doctrine, some cases are ‘difficult to reconcile’.[10] To put effect on this doctrine, the term of good faith has to be expressly stated.[11] Alternatively, court may imply a term comprising good faith.[12] Sometimes, not possible to imply such term.[13] In situation of a reduction in obligation[14], unduly onerous obligation[15], creating redundancy clauses[16] and with unintended consequences[17]. Thus the meaning of good faith will depend on its context.[18] This was the case in where a long-term PFI contract contained an express obligation of good faith, the court held that the trust has be in ‘material’.[19] Similarly, a term requiring the parties to “co-operate with each other in good faith” was interpreted as requiring a party not to exercise its discretion in an arbitrary, capricious or irrational manner.[20] Unlike the NEC contract, PAM Form has no basis on ‘good-faith’. ------------------------------------------- [1] Interfoto v Stiletto [1989] Q.B. 433 [2] Arcos v EA.Ronaasen[1933]AC470 [3] Walford v Miles[1992]2AC128 [4] Gold Group v BDW[2010]EWHC1632(TCC) [5] Compass v MidEssex Hospital[2013]EWCACiv200 [6] Emirates v Prime Mineral[2014]EWHC2104(Comm) [7] Shaker v Vistajet[2012]EWHC1329 [8] Petromec v Petroleo[2005]EWCACiv891 [9] YamSeng v International-Trade Corp.[2013]EWHC111(QB) [10] First Energy v Hungarian Bank[1993]2Lloyd’sRep194,196 [11] Chelsfield v Qatari Diar[2015]EWHC1322(Ch) [12] Fujitsu v IBM[2014]EWHC752(TCC) [13] Myers v Kestrel[2015]EWHC916 [14] Greeclose v National Westminster Bank[2014]EWHC1156(Ch) [15] Hamsard v Boots[2013]EHC3251(Pat) [16] Portsmouth v Ensign[2015]EWHC1696(TCC) [17] MSC Med.Shipping v Cottonex Anstalt[2016]EWCACiv789 [18] Walford v Miles [1992] 2 A.C. 128: Whether and to what extent the law of contract recognises enforceable obligations as to the way in which the parties are to behave? Where the parties act in a manner which conveys an intention to be bound, can there be an enforceable obligation to negotiate in good faith? [19] Medirest v Mid Essex NHS Trust [2012] EWHC 781 QB [20] Mid Essex v Compass Group [2013] B.L.R. 265 at 280 Three, the ‘advisory’ expressly mandated, ‘Architect should […] in guiding the negotiation between parties […] fair-resolution [meaning, good-faith basis]’, emphasis added. It is crystal clear that the ‘advisory’ mandated the Architect to facilitate parties to renegotiate their contract, in its capacity as a ‘para-legal’ professional, failing which, could the Architect be sued as legal-advisors, in this context of discharging its role? Fourth, the law holds that Immunity of certifier – in earlier case, certifier has immunity[1] only to be overturned later, that certifier has no immunity[2] as he holds a duty of care both as the agent to the employer and an impartial certifier to the contractor. Immunity only applies where there was dispute which called for a judicial decision such as adjudication[3] and arbitration. When the ‘advisory’ calls for ‘Architects are encouraged to be more lenient […]’[4], and ‘leniency’ is never an expressed ‘jurisdiction’ of the CA, it placed the Architects in very awkward ‘illegal’ positions, as to mean, having to consider that the PAM form has not taken a foreseeable circumstances of a pandemic, Architect could now take a ‘more lenient’ view to grant EOT, even when such is against the provision of the contract? How, sensible is such with regards to all the other roles as an impartial certifier, now subjected to challenge? ---------------------------------------------- [1] Chambers v Goldthorpe[1901]KB624 [2] Sutcliffe v Thackrah[1974]AC727 [3] S.108(4)HGCRA [4] PAM-Practice Notes 3/2020, p.2, item 1 Fifth, Loss and Expenses in the ‘advisory’ is stated that if on the basis of force-majeure, it cannot be granted, but and again, contradicted by the following, ‘parties agree that the costs […] should be shared’[1], meaning the entire contract has to be rewritten and Architect has this role to renegotiate the term for the parties … and the same can be said, to the rest of the contractual procedural-terms, if not taken with extreme-care, would rendered the architect acting ultra-vires as both an impartial-certifier and an agent of the employer. --------------------------------------- [1] PAM-Practice Notes 3/2020, p.2, item 2 Concluding, given the prima-facie meaning of the ‘advisory’ now, architects are empowered to facilitate parties of a PAM-Form Contract to renegotiate their contractual terms; and failing to exercise this ‘new-positions’ with care, will opens up ‘new-avenue’ for the architects to be sued and hopefully, with the current position of L3 Architects Sdn Bhd v PCP Construction Sdn Bhd [2019] 1 LNS 1321, Architects in Malaysia can be spared and have ‘immunity’ to do what it wishes …[1] ------------------------------------------- [1] < http://www.davidyek.com/adr/architect-has-no-duty-of-care-to-the-contractor-the-malaysian-approach> Postscript:Truly honoured to have senior and well known architectural practitioners to read my opinion on ‘matters affecting the profession’ in https://www.facebook.com/davidyekarchitect/posts/3003622449872587 and it is valuable that the comment given to me really inspiring, especially to younger-practitioners. It is a pity that he did not ‘comment’ directly in the comment section. After much persuasion, he agrees that his comment be made anonymously, and I truly thank him for his generosity and kind gesture:
Hi David. Read your review of the PAM advisory. I don’t want to comment on the contents because I think you had thought through the issues and while there are areas I might have slightly different take, it is better than a lot of opinions floating around. I had one observation to make. In all the publicised force majeure cases that come across before this advisory or indeed this pandemic, one party to the contract declare force majeure and state his basis for doing so. And then state the consequences of his declaration. So far we all assume that because the pandemic occur a force majeure event is in play. My considered opinion is force majeure has to be declared by one or both of the parties to the contract and the other party or indeed parties if more than one contract is involved; can dispute the declaration. I note your scepticism about architects being empowered to help parties to re-negotiate terms of contract and if I read it right, I will also add I agree that it is dangerous grounds we are encouraging architects to go on. Especially if they had not familiar with what they in for. Architects who will intervene as an ad hoc mediator are usually quite sure of what the limits of their contribution should be. I hope we had not encouraged some to bite off more than they can chew. Truly, hope that younger generations of architect ‘walk this path’ carefully, as the advisory is, in my mentor’s word, ‘not-gospel’ … Have a nice day, folks! |
DYA+CAuthorDYA+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'.
Archives
December 2022
Categories
All
|