Clause 36.1 of the PAM Form 2018 states, ‘Reference to adjudication is a condition precedent to arbitration for disputes under Clause 30.4. Any dispute under Clause 30.4 after the date of Practical Completion shall be referred to arbitration under Clause 37.0’ and Clause 30.4 of the same form states ‘… The Employer shall not be entitled to set-off the disputed amount until the adjudicator has issued his decision.’ and by virtues of these 2 clauses, had in one way or another, instituted that PAM may have the obligation to provide a panel of PAM adjudicators to adjudicate this matter, of which, is currently a lacuna waiting to be filled.
However, in the light of the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012), enforced in 2014, the notion of a panel of PAM adjudicators has to be taken in accordance with the Act not taken out of the Act. Unlike the common Security of Payment Legislation SOPL where as its name suggested, is a piece of legislation to ensure that payment to the contractors are secured, the CIPAA 2012 has the term ‘Adjudication’ included as the only statutory means to dispense ‘rough justice’ in recouping any unpaid claims in the construction industry, virtually monopolize by the AIAC as the sole appointing body. PAM has no locus-standi in any Act of Parliament to do so.
Again, as in the more recent case of Mega Sasa Sdn Bhd vs Kinta Bakti Sdn Bhd and Others , the plaintiff seek to set aside the adjudication decision on ground that the adjudicator’s appointment was not valid for the reason that the appointing director of the AIAC has no locus standi in view that his position as the Director of AIAC is not legitimate in accordance to the Asian African Legal Consultative Organisation AALCO Host Country Agreement. The court has yet to make a judgement on this.
One may, again asked, can parties contracting out (opt-out) of CIPAA based on the doctrine of ‘free-to contract’? In Ranhill E&C Sdn Bhd vs Tioxide (Malaysia) Sdn Bhd  and it was held that the terms of CIPAA as a legislation prohibits the parties from contracting out of its application, notwithstanding that there is no express-term within the Act. Any forms of contractual arrangement for dispute resolution would not exclude the application of CIPAA.
I appeal to the PAM ADR Committee to review this position as set out in this paper to reconsider the setting up of a separate appointing body of Adjudicators that may have go against CIPAA 2012.
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.
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