WHAT CAN BE LEARNT FROM KLRCA'S CIPAA 2012?

KLRCA (Kuala Lumpur Regional Center of Arbitration) is one of the government agency overlooking the matter of Arbitration that was less known for what they stood for until quite recently. With the newly minted Director who acted as the CEO, for the first phase, he wiped out completely any residues of its former regime from the staff to its Logo, upgrading the premises from a run-down 1970s office to its corporate look with top of the art conference and meeting facilities, brand new tagline with brand new vision and mission. Not forgetting with larger budget at his disposal from the Cabinet. The jet-setter Director is on his way to market KLRCA as the top regional center for Arbitration potentially overtaking Singapore. With such a high profile, he requires minions to work with him, if it is not - for him.

For the second phase, he brought in external talents to champion a cause. It has been for more than a decade, within the building industry, to adopt a highly controversial approach in law that state – Pay First, Argue Later! In fact this has been a new tagline for KLRCA, where with the new enforced CIPAA 2012 (Construction Industry Payment and Adjudication Act 2012) since 15 April 2014, anyone within the construction industries including suppliers and consultants have had the avenue for mandatory Adjudication to claim for outstanding payment for work completed, within a relatively short period of 100 days. The outcome of such law has brought KLRCA to a whole new chapters and never in its history has KLRCA achieved such prominent role. With such high power lobbying, he was eventually decorated by the Supreme Ruler of the country.

With this new Act, lawyers were said to have great funs in court, arguing on its merits and demerits until the cow goes home at the expanse of the industrial players. With more jobs for the lawyers and arbitrators as adjudicators going all round, the retinue of minions grew in leaps and folds. KLRCA even took a bolder stance to increase the Adjudicator Fee, feeling that if you pay peanuts, you get monkeys. It is time to see what has been installed for the third phase before he retires and move on to a higher pedestal.

On CIPAA, it will be great to note that in regardless of the contract one has entered into, the avenue to collect the unpaid fee, contract sum or due payment for work done through adjudication has been provided for by KLRCA within 100 days for lower fee compared to arbitration or litigation. Any awards issued by the adjudicator is enforceable in law. It placed the concept of “pay when paid” principle into oblivion and sub-contractors can now seek payment directly from the principal.