While the construction industries stakeholders are worried about payment, the legal fraternity is rather worried about the nuances of how to “stay” and how to seek “leave” of the Adjudication Decisions (‘AD’) in court.

A ‘stay’ for an Adjudication Decision (AD), is commonly known as a suspension for the AD to be enforced, under s.16 CIPAA, pending ‘setting aside’ by the court or final determination by the court or in arbitration. Whereas, ‘enforcement’ comes under s.28 CIPAA, the other end of the matrix. Thus the question, whether an AD, after having been enforced as an Order of the Court, can be stayed, and if so, would the Federal Court decision in View Esteem Sdn Bhd v Bina Puri Holdings Sdn Bhd [2018][1] be overruled? Such is the “leave” questions to the Federal Court in ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd Anor [2023][2].

Follows up, in the series of cases[3], the court will inclined to dismiss the stay when there is no clear or unequivocal error in the AD; even if there is an ongoing arbitration or litigation; and when there is no real risks of the inability to repay the adjudicated sum. However, as in another situation[4], a conditional stay maybe granted if court finds there is real risks of the inability to repay the adjudicated sum.

In summary, unless otherwise there is a gross injustice, the court tends to dismiss the stay when the AD has been upheld earlier.

-------------------------------------------
[1] MLJ 22; [2019] 5 CLJ 479
[2] 4 MLJ 720
[3] Ahmad Zaki v Versalink Marketing [2023] CLJU 1193; AMD Construction and Engr v LDE Projects Anor [2023] CLJU 1651; Wabina Constructions v LDE Projects Anor [2023] CLJU 1651; BMG Global v Juang-Antara Bina [2023] CLJU 2407; Meridian Contracts v Baeur (Malaysia) Anor [2023] MLJU 3043; Classic Series v Ng Lung Yang [2023] CLJU 2066 and Land Success Engineering v Amindo Packaging Anor [2023] MLJU 3146: no arbitration commence.
[4] Mudajaya Corporation Bhd v KWSL Builders Sdn Bhd & Anor [2023] 6 CLJ 770; Samsung C&T Corp UEM Construction JV Sdn Bhd v Eversendai Constructions (M) Sdn Bhd [2023] CLJU 2319

One of the contentious issues with regard to CIPAA is the recoupment of unpaid sum from the principal and the following chronicles of cases shed some lights onto this murky aspect in pragmatic terms.

In HSL Ground Engineering Sdn Bhd v Civil Tech Resources Sdn Bhd and another summons [2020][1], HSL served notices requesting payment directly from the principal and Civil Tech contends that there is no money due to them. The problem arise is when the principal fails to issue the written notice to the non-paying party. The court held that such failure attracts (1) the principal must pay the unpaid party; and (2) It would be fatal to defence that there are no monies due to the non-paying party, consistent with the earlier ratio.[2]

However, Glocal Tech Engineering Sdn Bhd v Panzana Enterprise Sdn Bhd [2021][3] departed from the above authorities. In this case, the principal Panzana did not issue any notice and argued, whether the question of “is there any money due” has to be satisfied prior to triggering the mandatory notice. The court surprisingly agreed with such position. In Pali PTP Sdn Bhd v Bond M&E Sdn Bhd [2021][4], court held that non-payment is presumed and the onus is for the unpaid party to enquire whether such has been paid from the principal; and “Adjudicated amount” also includes interest and costs.

Then, in Zeta Lektrik Sdn Bhd v JAKS Island Circle Sdn Bhd [2022][5], following the earlier ratios of CT Indah and PCOM, until Cabnet Systems (M) Sdn Bhd v Dekad Kaliber Sdn Bhd & Anor [2020][6] came into existence that the court laid out the test known as the Cabnet Four Tests:
 
Cabnet 4 Requirement Tests:
 
[First condition], the Test required to show that the unsuccessful party in CIPAA, (hereinafter “X”) has failed to pay adjudicated amount to the successful party (hereinafter “Y”).

[Second condition], it is evidence that the successful party in CIPAA, Y has made a request to the unsuccessful party, X’s principal, (hereinafter “Z”) to make the payment to the successful party, Y.

[Third condition], there is a sum owed from principal, Z to unsuccessful party, X during the time the successful party, Y has made a request to Z. Note: only when the first, second and third conditions are fulfilled, the evidential burden concerning the Third condition shifts from Y to Z, the principal.

[Fourth condition], the principal, Z did not response to the successful party, Y’s request for payment of the adjudicated amount.

S.30 of CIPAA can only be invoked if there is money due by the principal, where this evidential burden is a condition precedent before issuance notices under s.30.

Following such, in JDI Builtech (M) Sdn Bhd v Danga Jed Development Malaysia Sdn Bhd [2022][7] the COA held that s. 30(5) of CIPAA “if money is due by the principal to the party, such is the overarching pre-condition before any subsections of s.30 may be utilised; [where] an application under s.30 is ill-suited where everything hinges on the lawfulness or unlawfulness of the main contract termination as the Main contractor is not a party to the s.30 proceedings.[8]

Then, the question of whether s.30(1) notice is invalid in the face of judicial management application? In Cosmos Infratech Sdn Bhd v Turnpike Synergy Sdn Bhd (HC), the court held that s.30 is a separate and distinct statutory obligation imposed on a principal to make payment and must take precedence over the general sections of companies act.
 
Then, the question of whether how to determine who is the principal? In Progress Centre Engineering sdn bhd v Desaru Corniche Hotel sdn bhd & MRCB [2022][9] the court held that it is by conduct placed on the same lateral level in the chain of construction contract as the main contractor, meaning that the employer of the project is the principal for the purposes of s.30 of CIPAA.

Arena Perintis sdn bhd v Pembinaan Bina Bumi sdn bhd [2023] [10] went on to hold, winding up does not affect direct payment under s.30 of CIPAA; and does not contravene the rule of undue preference and is not against of the pari passu principle; as such, there is no necessity to pierce the corporate veil; and any failure to issue s.30(2) notice is fatal that there is no money due or payable.

---------------------------------------------------------------
[1] MLJU 717
[2] CT lndah Construction Sdn Bhd v BHL Gemilang Sdn Bhd  [2019] MLJU 1215 CA; PCOM Pacific Sdn Bhd v Apex Communications Sdn Bhd & Anor [2020] MLJU 118; HMN Nadhir Sdn Bhd v Jabatan Kerja Raya Malaysia & Ors [2018] 1 LNS 1938
[3] MLJU 474
[4] (CA) W-02(C)(A)-399-02/2021
[5] MLJU 392
[6] MLJU 311
[7] (CA) J-02(C)(A)-1066-06/2022
[8] JDI Builtech (M) Sdn Bhd v Danga Jed Development Malaysia Sdn Bhd (CA) J-02(C)(A)-1066-06/2022
[9] wa-24c-187-09/2022
[10] BA-24C-32-04/2023

This article aims at investigating the inception; growth; and recent development of the role of adjudication in the Malaysian construction industry, from a perspective of an adjudicator. It commences with the issue, whether the creation of the Construction Court and Construction Industry Payment Adjudication Act 2012 (‘CIPAA’) resolved the construction industry’s conundrum? Looking at its inception phase, the industrial stakeholders with Construction Industry Development Board (‘CIDB’) as the forerunner since 2003, has championed the course, only to be ‘derailed’ by the Bar Council (‘BC’) with its ‘hypothetical doubts’ as to the viability of the CIBD’s version of CIPAA. Together with the AIAC, the BC lobbied the AC’s Chamber to implement the AIAC’s version of the CIPAA legislation, leaving a ‘bitter after-taste’ to the CIDB’s earlier efforts, now begging the question, how CIPAA fares in its growth stage? Next, pondering at the astronomical growth of CIPAA with 89% success rate, 4-years into implementation of CIPAA, it has since evolved into ‘mini trials’, ‘document only arbitration’ or even ‘fast track or expedited arbitration’. In a nutshell, the findings of View Esteem Sdn Bhd v Bina Puri Holdings Sdn Bhd[1] hereinafter (‘View Esteem’), reverses a body of jurisprudence developed in those 4 years making CIPAA complicated, inefficient and lost its focus. This follow by the peeling into the current state of the CIPAA, to draw upon the correct definition of the problem such as complication; monopoly; and over legalistic, generating the ‘push effect’ for the construction stakeholders away from CIPAA. Notwithstanding the pro-adjudication approach taken by the court. Hoping for solutions that will almost surface within, in the turbulence of the ‘ocean of legal-entanglement’, stakeholders are forced to look back to the ‘star’ for guidance and to salvage the ‘compass’ that had been so conveniently casted away, to guide the CIPAA vessel to its next destination of glory if any, in the following area of structural, procedural and institutional reform, begging the question, what can really be done?   
​
------------------------------------------------------------
[1] [2019] 5 CLJ 479; [2017] 1 LNS 1378.

​Since 2014, there has been an astronomical increase in CIPAA adjudications related feedstock of cases in courts[1], as compare to the other forms of ADR[2], surpassing even arbitration. It now begs the question, how CIPAA fares in its growth stage?
 
The Growth 

AIAC (2016) statistic showed, CIPAA has since grown to be an extremely successful for Claimant to retrieve its unpaid sum with 89% success rate.[3] Such landmark success rate eventually turning the acronym ‘CIPAA’ into a verb such as, ‘I will CIPAA you’. It has come a point, as rightly observed by Chan, ‘one may even be discouraged upon receiving the Payment Claim’ to even serve its Response.[4] What if a party refuse to participate? What are the consequences of failing to participate in an adjudication?[5] Simple as these questions maybe, in Chan’s observation, it is potentially a ‘trap’ for setting aside under s.15 of CIPAA for a ‘novice adjudicator’.[6]
 
Setting aside appears to be the norm lately, although within a narrow ambit. The early case law as in Wong Huat Construction v Ireka Engineering & Construction[7], it was held that ‘setting aside’ restores all parties to their original positions and parties are free to adjudicate, shortfall of foreseeing complication whether can a Decision be severed, as to only enforce the enforceable part? Naza Engineering v SSL Dev[8], held that court has no power to set aside a part of the Decision, relying on BM City v Merger Insight[9]. Finding in contrast in JEKS Engineering v PALI PTP[10], the court has power to severe any part of the Decision. What is taken to be settled are, one, court could not set aside Decision on grounds of mistake in facts and/or in law; the court will not re-evaluate the evidence; and any reasons, brief as they may be, is taken as the adjudicator’s justification.
 
Revisiting Chan’s earlier assertion, these traps potentially evolved into ‘guerrilla tactics’[11] as in (1) application to extend time for submission citing not having to receive client’s instruction, failing which, counsel will resign; (2) adjudicator risks breaching natural justice by not allowing parties to ventilate the next course of action, by proceeding ex-parte; and (3) totally ignore CIPAA entirely, to deal later, claiming fraudulent, although such has been given the strictest proof.[12]
 
After 4-years into its success story, the Federal Court’s (‘FC’) decision in View Esteem v Bina Puri Holdings[13] (‘View Esteem’) throw the ‘pendulum of success’ into ‘disarray’, allowing matters raised beyond the Payment Response to be adjudicated.[14] In Foo’s observation, such decision, ‘reverses a body of jurisprudence developed in those 4 years, as well as the general understanding and practice of the industry’.[15] Such findings accentuate, whether the procedures put in place suitable for complex claims, which could revolve around complex questions of fact and law, which is now a reality.[16]
 
Similarly, adjudicators are forced to decide on ‘Final Account’, a subject aptly for litigation or arbitration.[17] In Martego v Arkitek Meor & Chew[18] (‘Martego’), CIPAA applies to matter pertaining to ‘final claims’ where the term ‘progress payment’, as interpreted by the courts, was wide enough to include the ‘final payment’, so long there are payment claims relating to construction contract. The same ought to be said, Payment Claim are revisable and it does not bound by the amount set out in the Payment Claim.[19] Apparently, courts would not have understood the concerns, ‘given the short time period within which to handle a claim, is the possibility of unjust, incorrect and aberrant decisions real?’[20] Both CIDB and the AIAC only contemplated, ‘interim payment issues’ not ‘final account’, but findings in Martego accentuated Lam’s concern, ‘the effect of having a hillside collapse like Highland Towers being referred to the Adjudicator for a decision in a matter of weeks’.[21]
 
Also, ‘it has been suggested by PAM[22], but was not accepted that lawyers would not be allowed to act as adjudicators or represents parties to disputes referred to adjudication’.[23] As Harban observed, with involvement of lawyers, CIPAA has evolved into ‘something else’ being ‘complicated and overly legalistic’. Harban pointed out, ‘CIPAA was meant to assist lay persons so that they can be self-represented nevertheless, this has been complicated with the direct involvement of legal practitioners’[24], eventually led to various complications that in Foo argued, ‘reverses a body of jurisprudence developed in those 4 years, as well as the general understanding and practice of the industry’.[25] As apparent, these ‘legal charade’, dressed up as the questions of law, i.e.  Retrospective versus prospective[26]; Non-certified payment[27]; Winding up conundrum[28]; Singular versus Multiple Contract[29] and of many more others[30]. Common procedural matter such as ‘notice deemed served’, became an unsettled affairs, i.e. proof of mailing is not the proof of receiving following Yap Ke Huat v Pembangunan Warisan Murni Sejahtera[31], notice cannot be deemed served with AR-Registered, also in Goh Teng Whoo v Ample Objectives[32], AR-Registered does not conclusively mean, the recipient has received the same. AR-Registered continues to be interpreted as service are ‘presumed’, until the contrary is proven.[33] These are legal complexities that baffled lay ‘technical adjudicator’.
 
CIDB initially has a wider view to include ‘all disputes and not just restricted to disputes related to payment issues’[34]. Lam argued, by such, CIDB’s proposal will include ‘subjecting the individual house owner to an adjudication process, ignoring that it is the house owner who generally complains’.[35] This subsequently, led to the dilemma for PAM, as contained within its Standard Form of Building Contract (‘SFBC’), a provision for ‘contractual adjudication’[36] which initially a multi-tier arbitration clause which Rajoo pointed, is a misnomer against statutory mandated adjudication, CIPAA.[37] Such conundrum potentially left a lacuna, as in s.3 of CIPAA: Non-Application, whether such cl.36 of PAM SFBC 2018 will also be construed as ‘contracting out’ of CIPAA, based on the doctrine of ‘free to contract’?  In Ranhill E&C Sdn Bhd v Tioxide (Malaysia) Sdn Bhd[38], 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. Thus, the issues in relation with s.3 of CIPAA: Non-Application, has no other avenue for recourse, beside arbitration and litigation. The current state of CIPAA being compulsory, in essence, deviated from the original intend of CIDB when it attempts to address, ‘if parties decide not to opt to exercise their rights to adjudication, they may opt for other dispute resolution’, to include adjudication by contract.[39]
 
Further, non-application of CIPAA, eventually led to ‘split-hair’ arguments as to whether, ‘lost and expense’ (‘L&E’); ‘liquidated damages’ (‘LD’); and ‘extension of time’ (‘EOT’), fall within the jurisdiction of CIPAA? These issues are not entirely payment issues, per se. In Syarikat Bina Darul Aman v Government of Malaysia[40], it was held that adjudicator must decide on L&E claims as such claims came within the ambit of CIPAA. These claims were due to the delay in completion of works and therefore payable as part of the amount claimable for the additional costs incurred for work. However, not all L&E claims are within the purview of CIPAA, i.e. claim for special damages. Then again, this matter is truly unsettled, if the L&E is not a provision of the contract, it cannot be awarded by the Adjudicator.[41] In another case, the High Court (‘HC’) held L&E is not a ‘payment’, thus not allowable in s.4, CIPAA[42]. In yet, another case, notice requirement is only apply to loss that is ‘beyond reasonably contemplated’.[43]
 
Despite these hypothetical doubts, 4-years into implementation of CIPAA, Harban argued, ‘CIPAA being complicated with the direct involvement of legal practitioners, now lengthened because the decision is subjected to appeal all the way to the FC. Due to the complexity and lengthy processes, smaller industry players are no longer benefiting from the adjudication process; these players are intimidated by the complicated process; making adjudication having little difference compared to litigation or arbitration’.[44] In a nutshell, CIPAA is complicated, inefficient and lost its focus.[45] It has since evolved into ‘mini trials’, ‘document only arbitration’ or even ‘fast track arbitration’, for instance, holding to the principle in View Esteem, Respondent has the right to ‘throw in the kitchen sink’[46] at any point in time during the progress of CIPAA, eventually leading to submission of voluminous ‘expert reports’ and seek for hearings to be held, which in MRCB Builders v Wazam Ventures[47], such was not allowed but in Guang Xi Development v Sycal[48], failure to allow for a hearing in adjudication is contravening natural justice.
 
Beside these ‘legal confusions’, CIPAA in its inception, as identified by CIDB is to ‘apply to all parties in the construction works, consultancy services and construction supplies in both government and private sectors’.[49] It is not only benefitting the contractors as ‘CIPAA can lead to better practices, greater integrity and efficiency’.[50] In reality, the unfolding events as prescribed by Harban as CIPAA is complicated, inefficient and lost its focus[51], brought with it ‘adverse consequences to the contractor and consultant’.[52]  Now, CIPAA remains as seen as ‘toothless tiger’ or ‘winning on paper’ under such consideration. Foremost, as Chan asserted, not many aware that CIPAA is a 2-stage approach to successfully mount a claim, where (1) a favourable decision must be obtained; and (2) such decision is enforced in the HC.[53] Such 2-stage effects are not only ‘unaffordable’ it goes against the fundamental principle of CIPAA for ‘cheap rough justice’. BC’s hypothetical doubts of what are the remedies provided in CIPAA in the event of payment disputes’[54], is irrelevant, as ‘application to the courts, to obtain the writs of seizure and sale; garnishing proceedings and so on’ are expensive endeavours and rightly, CIDB pointed out that ‘lawyers are far from being out of work’ in the attempt to contemplate is ‘CIPAA will lead to a reduction in arbitrations and litigations and corresponding work for the lawyers’.[55] Whether with CIPAA, ‘will payment-default no longer be an issue’? The textbook answer, ‘no one can guarantee payment defaults will no longer be an issue’ remains relevant.[56] Thus, the next rationale question is why? Perhaps, revisiting Lam’s contention, as to how relevant are these hypothetical doubts against the unfolding events post 2014, which is no longer hypothetical? 
 
The Recent Development 

CIPAA is a going concerns and it is going to stay for another decade or so. Holding to Harban’s assertion, CIPAA is complicated, inefficient and lost its focus[57], it is no longer a ‘affordable’, ‘fast and furious’ access to ‘rough justice’. These ‘rough justice’ of ‘pay first, argue later’, as Justice Lee Swee Seng pointed out, is now, ‘fine justice’ of ‘argue, argue more and pay much, much later’.[58] J. Lee quick to make reference to Steve Jobs’s, quote, ‘if you define the problem correctly, you almost have the solution’ as a way forward for CIPAA. So, what the problem is?
 
(1) Complication: 

In appointing adjudicator, as in Zana Bina v Cosmic Master Development[59], it was held that party who participated fully in an adjudication proceeding without raising any objection as to the validity of the adjudicator’s appointment during the proceeding was estopped from raising the objection subsequently in its setting aside application. Yet, the dust is not yet settled, as the issue arises whether the parties must first attempt to agree on an adjudicator before a request for nomination from the Director of AIAC? Short answer, no.[60]
 
In suing the consultant architect, arising from a recoupment of a failed CIPAA adjudication in Leap Modulation v PCP Construction[61], the losing party commence another proceeding suing the architect in L3 Architects v PCP Construction[62], citing the classic common law case of Sutcliffe v Thackrah[63]. This set in motion the precedent that consultants are ‘immune’ from being sued by contractors as unlike in Sutcliffe, there is no privity of contract between the contractor and the architect, and thus there is no proximity as to the architect to render its duty of care. 
 
In understanding technical term, such as ‘storey’ to also include basement, as in Tan Sri Dato' Yap Suan Chee v CLT Contract[64] the meaning of storey was referred to the Uniform Building By-laws 1984 to also include basement, thus not necessarily floor above ground. Similarly, the term ‘occupation’ must be given the widest interpretation to include residential or commercial as in Liew Piang Voon v WLT Project Management[65]. 
 
(2) Monopoly: 

On the absent of the Director to appoint adjudicator, there has been a vacuum in the Directorship of the AIAC[66] when the former AIAC-Director was charged for alleged Criminal Breach of Trust (‘CBT[DYTW1] ’), leading to his resignation.[67] In this case of Sundra Rajoo v Minister of Foreign Affairs[68], Rajoo has since been acquitted due to his immunity[69] having being defended by AALCO on the basis of ‘exterritorial’[70], ‘functional necessities’[71] and ‘representative’[72].[73] However Rajoo’s case[74] demonstrated the conundrum faced by the Malaysian government, as argued by Thomas, such an immunity has placed the former AIAC-Director, above the law even above the Ruler.[75] But such impasse has left a dent in AIAC, being the sole appointing body for CIPAA adjudication, thus as Lam’s concerned, ‘CIDB is in control of registering and appointing adjudicators’[76], is in actual fact has no implication whatsoever, as it is irrational to actually vested upon a single appointing body for such a noble task.
 
On the AIAC’s locus standi, as more cases move up to the court, as in Leap Modulation v PCP Construction[77], the court has gone as far as to interject the manner and efficacy of CIPAA in dispensing ‘rough justice’ and to the nature of AIAC being a ‘foreign entity’ with very little or no ‘check and balance’ self-regulation, had a monopoly grip on the dispensation of justice in Malaysia, no matter how ‘rough’ it is.[78] The AIAC has since taken the same matter to the Federal Court to have this portion of the judgement expunged.[79] The fate of CIPAA, while having put ‘off tangent’ from its initial purposes with more and more inconsistent and unpredictable judgements from the court, was plagued by alleged corruptions resulted in the former Director of the AIAC being replaced, based on the detailed insider content of just a ‘poison-penned’ letter.[80]  
 
On the Director’s locus standi, in Mega Sasa v Kinta Bakti[81], the plaintiff seeks 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. However, the HC held that CIPAA does not violate Article 8(1) Federal Constitution. It also rejected the challenge, that CIPAA is a ‘usurpation of the judicial power of the court’ in violation of Article 121 Federal Constitution, reason being CIPAA is a judicial function and not a replacement of the courts' judicial power. It further affirmed that the acting director had the power and duty to appoint the adjudicator, regardless if his position as the ‘director’ has yet to be finalized.
 
(3) Over Legalistic: 

On answering the right question wrongly and the other way around. Courts are not concerned with merits or correctness of the decision.[82] This include, erroneous assessment of documentary evidence.[83] Therefore, Adjudicators are not bound by the disputes referred to them in the exact way as pleaded by the parties, especially with regard to the remedies sought.[84] However, the recent JKP v Anas Construction[85] holds that adjudicator must only and narrowly look at the actual contractual provision pleaded by the parties and not stray away with its own finding, even if in his opinion there are other contractual provisions that are more aptly relevant to the claim, as provided as evidence, failing which contravening natural justice. Similarly, the adjudicator must not in his own effort, investigate onto the validity of the evidence presented although CIPAA allows for inquisitorial proceeding as demonstrated in Cescon Engineers v Pesat Bumi[86]. The sum of these account for answering the wrong question rightly, thus where is the ‘fine line’? Similarly, there were risks where ‘expert construction adjudicator’ not schooled in law, ‘make new contract provision’ for the parties, without even realising it[87], thus how to draw the line of committing a ‘mistake in law’ and yet not fatal?
 
On being the ‘legal playground’, CIPAA originally intended to be ‘fast and furious’ dispensation of justice by construction expert to construction stakeholders, but it has since morph into a ‘legal arena’ as ‘mini arbitration’, ‘mini trail’, ‘document only arbitration’ or even ‘fast track arbitration’, as J. Lee implied, it is ‘fine justice’ now. AIAC (2021) latest statistic shows, CIPAA from its humble beginning of 29 cases (2014), peaked to 816 cases (2019) and then dropped to 530 (2021), indicated the downhill movement of CIPAA, as Harban observed to be unaffordable, complex and ineffective[88], where majority of the parties’ representatives are law firms.[89] There may be truth, as Ali argued, ‘lawyers (experience) can be helpful in addressing issues in construction arbitrations or mediations while some may be unhelpful as insinuated by PAM and the NSW Act’.[90] Ali suggested that ‘training for robust adjudicator with high standard is needed’, yet the question is can such be outsourced instead of being monopoly by a single authority? More aptly, unhelpful lawyers are promoting robust ‘guerrilla tactics’ in taking a ‘second bite of the cherry’, post adjudication response, by seeking for a hearing to present the ‘questions of law’ previously not canvass, citing View Esteem and ‘hold ransom’ of the adjudicator citing Guang Xi Development v Sycal[91], failure to allow for a hearing in adjudication is contravening natural justice. In another adjudication case[92], a party representative represented by a law firm, requesting the adjudicator to ascertain the quantum of work done without even providing the site progress report or reliable consultant’s certification and attempt to set aside the Decision, citing the adjudicator failed to prompt the party as to what documents required.[93] This, again a classic example of lawyers, not technically trained, baffled by the technical construction requirements and norms.
 
On being a robust defender, another kind of ‘guerrilla tactics’ employed as robust defence is the systematic use of Statutory Declaration (‘SD’) in lieu of ‘real concrete evidence’, as Premaraj observed, ‘to be the weakest form of evidence’[94] mirrored one being observed in Cempaka Majumas v Ecoprasinos Engineering[95], where the court finds, the adjudicator has the power not to take into consideration of the SD. Such tactics has through time, evolved to even launching a ‘police report’ citing the possibility of fraud, to compel the adjudicator that he has no jurisdiction to preside over the matter involving criminality, which is again, unfounded as the ‘presumption of innocent’ is the underlying doctrine of natural justice.[96]
 
On being territoriality, in the case of Tekun Cemerlang v Vinci Construction Grands Projects[97], West Malaysia lawyers are prohibited to represent disputants in CIPAA Adjudication where the seats are in Borneo.[98] The repercussions spark suggestion that unlike arbitration, statutory adjudication has no seat.[99] Such opinion rely on the provision of CIPAA[100]. It would have been ‘less complicated’ if lawyers are not involved, as rightly demonstrated in Cempaka Majumas[101] where the court held the position of a ‘Claim Consultant’ as party representative did not contravene s.8 of the Sarawak Advocates Ordinance.
 
On over complying with timeline, sheer confusion as to the meaning of ‘Working Day’ previously construed as where the site is located, instead the HC held that the ‘Working Day’ for the delivery of the Adjudicator’s Decision must be construed as the ‘working day’ of where the Adjudicator’s office is located.[102] This area of law is unsettled. As to the definition of “Date” in s.5(2)CIPAA must necessarily mean “a calendar date or a statement by which the due (calendar) date for payment is capable of being identified” and not simply, “immediate” for “instantly”, “promptly”, “forthwith”, “at once” or “straight away”.[103] On another matter, commencement of adjudication is upon appointment of adjudicator as compared to serving of the notice of adjudication.[104] The issue is made murkier when it is textbook provision that CIPAA has a strict timeline compliance, i.e. in Skyworld Development v Zalam Corporation[105] a day late ultimately rendered the Decision void, but in another case, adjudicator must not act fast to quickly dismiss the adjudication response if it is served even a day late, citing View Esteem. Whereas in Utama Motor Workshop v Besicon Engineering Works[106], the ‘hair splitting’ argument of term “make” is distinguishable from the word to “deliver” and to “release”, as the court held that when an adjudicator “makes” an adjudication decision is a question of fact and very much depends on the date stated on the first and last pages of the adjudication decision.[107] This applied to some instances where the site in question is ‘outstation’ and via AR-Registered Post, no one from the other side has attempted to receive the Hard-copy Decision, yet the manner of serving notices hold. Yet another case, in Itramas Technology v Savelite Engineering[108], the court held that there was actual bias by the Adjudicator for failing to give effect to the MCO[109], thus the question whether it is important to stick to the strict timeline of CIPAA or to allow for ‘reasonable’ flexibility?
 
On being ‘flip-flopped’, in MIR Valve v TH Heavy Engineering[110], it is held that ‘ship building’ contract is excluded from CIPAA within the meaning of “construction work”. The similar judgment is held for YTK Engineering Services Sdn Bhd v Towards Green Sdn Bhd [2017], where a shipping contract or a mining contract does not fall within the meaning of “construction work” under s.4, CIPAA. But, in a platform-anchored into the land, is adjudicate-able[111], where interestingly J. Lim Chong Fong, then held, as observed by Sandrasegaran and another, ‘he was (1) not bound by his own prior views [inclusive of the quoted passage in Mir Valve which he was referred to]; and (2) capable of adjudging the case impartially despite the aforesaid’.[112]
 
The issues and concerns raise here as the recent developments, are not exhaustive, as CIPAA has enter into its ‘volatile zone’, plagued with multitude of problems that at any one time, the construction stakeholders including the legal fraternity will dispose-off CIPAA for litigation and or arbitration, not discounting the birth of ‘expert determination’ on the Malaysian soil, where it is currently at its infancy, as cited by Rajoo, is ‘without any legal-baggage’, straight forward without a need for ‘reasoned decision’, even more ‘faster and more furious’ and legally binding.[113] The trend of CIPAA, as observed by COA J. Lee Swee Seng, at the KL HC seeking to be set aside and or enforced, under s.28, CIPAA, as of 30 Sep 2022, allowed (58%), disallowed (11%) and discontinuation (22%); while seeking to be set aside and or enforced, under s.15, CIPAA, as of 30 Sep 2022, are allowed (11%), disallowed (50%) and discontinuation (32%); and set aside and or enforced, under s.16, CIPAA, as of 30 Sep 2022, are allowed (4%), disallowed (35%) and discontinuation (38%),showing a pro-adjudication approach taken by the court.[114] Perhaps it is also timely to revisit CIDB’s Initial Proposal, for a solution in structural, procedural and institutional reform of CIPAA.
 
Conclusion 

This discourse starts by asking, does the creation of the Construction Court and CIPAA resolved the construction industry’s conundrum? The discussion thus commence with looking at the ‘roller coaster’ of long hauled ‘gestation’ since 2003 to make CIPAA a reality in 2014, where the implemented version was not as envisioned by the construction stakeholders but by the legal fraternity with the AIAC, all that came about from the ‘hypothetical doubts’. Further discussion pointed to the growth stage that witnessed the ‘disjointed’ comprehension of this piece of jurisprudence as ‘design intended’ by the AIAC with that of another version as interpreted by the upper courts, notably precedent set in View Esteem, changing the course of CIPAA into ‘disarray’. This follow by peeling into the current state of the CIPAA ‘affairs’ coupled with ‘incidental events within AIAC’ and the effects of the pandemic, to draw upon the ‘correct definition of the problem and with hope, the solution will almost surface within’ as predicted by Steve Job. So, what the problem is, but of (1) Complication; (2) Monopoly; and (3) Over Legalistic, generating the ‘push effect’ of the construction stakeholders away from CIPAA notwithstanding the pro-adjudication approach taken by the court. With the amount of stockpile of cases in court, as compared to the other forms of ADR, it is testimony of the amount of curial intervention invested into CIPAA. So, does the creation of the Construction Court and CIPAA resolved the construction industry’s conundrum? Obviously, NOT. Now, in the turbulence of the waves in the ocean of law, we are forced to look back to the ‘star’ for guidance and seek the ‘compass’ that we had so conveniently cast away, to guide the CIPAA vessel to its next destination of glory in the following area of structural, procedural and institutional reform, asking the question, what can be done? Not exhaustive as this may be, the followings are the area we could improve on:
 
(1) Structural Reform 

On triangulated relationship[115], among curial intervention, the disputing party and the adjudicator, it is important for the court to wholly submerged into the core objectives of CIPAA, identified as the 4 key features in the CIDB’s version[116], where the interpretation of the Act takes into the perspective of ‘rough justice’ and not ‘fine justice’, in the hope that the decision as in the View Esteem be reversed. Having considered that, the issue on res-judicata[117], as in ‘procedural res-judicata’ must be eliminated as CIPAA is only temporary finality, but in Samsung C & T Corporation v Bauer[118], the doctrine applies to where the portion of the claims that had been adjudicated must not be re-adjudicate.[119] Similarly so, this doctrine apply to presentation of documents, previously not presented.[120] Similarly, technical issues best resolved by technical people, excluding lawyers if the other party is not represented by lawyer[121] and adjudicators are technical professionals that need to be legally trained.[122] In that manner, over legalistic issues as mounted in Integral Acres v BCEG International[123] would not have surfaced in the first instance. Coupled with this, there should be decentralisation of training and appointing of adjudicator via the various institution of the construction stakeholders[124], also to include publishing of the sanitised  version of the Decision, to add to the feedstock of knowledge in adjudication[125].
 
(2) Procedural Reform 

On streamlining and shortening of the procedure and time of delivery of Decision, mirrored the draft SOPL (Hong Kong)[126], both the Payment Claim or Response, are considered the Adjudication Claim and Response as there is only Claim, Response and Reply with no further ad hoc mechanism required.[127] The current curial discouragement of hearings[128] and rejoinders[129] coupled with a simple yet ‘bullet proof’ approach to making the decision[130] in CIPAA must be maintained, i.e. suffice to say, ‘[incline] to agree/disagree or persuaded/not persuaded’ as reasons, as court held finding of facts cannot be challenged[131].
 
On putting a limit for adjudication. CIPAA must not be a ‘forum convenience’ to contemplate complex issues such as ‘final account’[132] and should well deal with all matters interim in nature[133], bar from adjudication upon issuance of certificate of substantive completion or practical completion, leaving the rest for arbitration or litigation. There should also be a cap value of dispute as Harban argued, the current adjudicator’s fee enshrined in Act are downright discouraging[134] and only a dispute reaching a certain threshold can be adjudicated and such also include properties owned by a single individual or for its own dwelling at any storey[135]. Similarly so, the Act should allow the creation of an stakeholder’s account where the disputed sum must be mandatory deposited prior to adjudication[136], as this will once and for all encouraged ‘pay first argue later’[137], hopefully achieving the objective that payment default is a matter of the past[138]. Learning from the pandemic, email communication must be mandated and any timeline, be best taken to be flexible within the 100-days framework[139]. Where permitted, contractual adjudication must be allowed as in the construct of the DRS/DRA[140], in line with the other ADR mechanism and in other word, this Act can be contracted out provided party has pre-agreed to any forms of contractual adjudication[141].
 
(3) Institutional Reform 

On institutional intervention, AIAC could maintained its role, instead of overseeing the training, appointing and administering CIPAA adjudication, to making policy and monitoring the other allied institutions that have contracted out with such role of the training, appointing and administering CIPAA adjudication, while constantly provide a seamless platform with the judiciary to iron out any ‘wrinkles’ in the interpretation of the Act, while collecting annual prescription from the outsourced institutions. The inclusion policies will mutually benefitted construction stakeholder institutions and not looked upon as a ‘legal playground’ befitting only the legal fraternity. Such is glaring when the AIAC has stopped providing information pertaining to the professional background of adjudicators empanelled with the AIAC, in 2016 indicated lawyer (177); Engineer (59); Architect (11); QS (51); and Others (65), indicating an imbalance participation of technical people in adjudication.[142]
 
These arguments and proposals, as put forward, are not exhaustive as all kinds of issues are now, pushed back to the court for decisions, aptly taken as the ‘knowledge gap’ or limitation for this critical observation; also not limited to the fact and caveat that this is not a legal advice and the views made in this articles are of the personal view of the author, made for academic purposes without commercial value, based on published materials.

-----------------------------------------------------------------------------
[1] Lam, ‘Latest Development in CIPAA and Adjudication Law’, (20 Nov 2021), L2-series: reported 2018-2021, +200 cases reported and 2020 alone, +100 cases reported, far exceeded arbitration case report; AIAC Annual Report 2019-2020: Oct 2021, 200 reported cases in the HC; 2020, 100 reported cases in the HC; 537 cases registered with the AIAC.
[2] Alternative Dispute Resolution (‘ADR’).
[3] Cheang, ‘A Study of the Effectiveness of the Malaysian CIPA Act vis-à-vis the Impact of Oversea Construction Payment Legislation on their Respective Construction Industries’ (BSc.QS, 2017, UTAR), p.36: citing KLRCA Annual Report (2016).
[4] Chan, ‘CIPAA update – A case of creeping complexities?’, (3 Jul 2019), <https://www.cipaamalaysia.com/blog/cipaa-update-a-case-of-creeping-complexities>, accessed 1 Nov 2022.
[5] Ali [n17], p.4-22.
[6] Chan, ‘Test for Bias Against an Adjudicator’, (9 Aug 2021), <https://www.cipaamalaysia.com/blog/test-for-bias-against-an-adjudicator>, accessed 1 Nov 2022.
[7] [2018] 1 CLJ 536.
[8] [2020] 9 MLJ 499
[9] [2016] MLJU 1567.
[10] [2021] 9 MLJ
[11] ADJ-4341-2022; ADJ-4374-2022
[12] Rosha Dynamic Sdn Bhd v Mohd Salehhodin bin Sabiyee & Ors and other cases [2021] MLJU 1222
[13] [2017] 1 LNS 1378.
[14] Foo, ‘CIPAA Adjudication: What has Changed since View Esteem Sdn Bhd v Bina Puri Holdings Bhd’ (27 Sep 2018), <https://www.ganlaw.my/embrace-the-storms-of-the-movement-control-order-mco-2/>, accessed 1 Nov 2022.
[15] Ibid.
[16] Ali [n14], p.20: Question 13.
[17] Ali [n14], p.17: Question 9.
[18] [2017] 1 CLJ 101: The Federal Court in its grounds of judgment dated 1 August 2019 in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd decided on important points of law on adjudication and final payments under a construction contract. https://themalaysianlawyer.com/2019/08/13/case-update-federal-court-decides-on-final-payments-adjudication/
[19] Integral Acres Sdn Bhd v BCEG International (M) Sdn Bhd and other cases [2021] MLJU 1889
[20] Ali [n14], p.20: Question 13.
[21] Lam [n18], p.13.
[22] Pertubuhan Arkitek Malaysia [Malaysia Institute of Architects] (‘PAM’).
[23] Ali [n14], p.21: Question 16.
[24] The Malaysian Lawyer, ‘CIPAA: Adjudication Leading the Way?’, <https://themalaysianlawyer.com/2018/09/05/cipaa-adjudication-leading-the-way/>, accessed 1 Nov 2022: cited the Malaysian Law Conference 2018.
[25] Foo [n 39].
[26] Jack-In Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2020] 1 CLJ 299: FC puts an end to this long-haul debate, by holding that CIPAA to be applied ‘Prospectively’.
[27] Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd. [2015] 8 CLJ 728: In the absence of certification, the non-paying party cannot deprive the unpaid party from availing the adjudication process.
[28] Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] MLJU 49: it was held by the Court of Appeal, that a successful claimant in adjudication need not have the adjudication decision registered before issuing a statutory notice of ‘winding up’; finding in contras, ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd (Case No. WA-24NCC-363-07/2019): High Court granted an injunction restraining ‘winding up’.
[29] Ireka Engineering & Construction Sdn Bhd v PWC Corporation Sdn Bhd [2020] 1 MLJ 311: the term contract in CIPAA refers to ‘singular’ contract and not ‘contracts’; finding in contrast, Punj Lloyd Sdn Bhd v Ramo Industries Sdn Bhd & Anor and another case [2019] 11 MLJ 574: contract by reference is a singular contract.
[30] Yek, ‘My SOPL: Security of Payment Legislation in the Malaysian Construction Industry, My Observation’, (15 Aug 2019), <http://www.davidyek.com/adr/my-sopl-security-of-payment-legislation-in-the-malaysian-construction-industry-my-observation>, accessed 1 Nov 2022.
[31] [2008]4CLJ175.  
[32] Civil Appeal:02(i)-35-04/2019(W).
[33] Interpretation Acts 1948 and 1967,s.12; see also <http://www.davidyek.com/adr/serving-of-notice-and-documents-in-cipaa-adjudication-where-is-the-norm-now>, accessed 1 Nov 2022.
[34] Ali [n14], p.16: Question 8.
[35] Lam [n18], p.13.
[36] PAM Form 2018, cl.36: Adjudication.
[37] Rajoo and others, ‘The PAM 2006 Standard Form of Building Contract’, (LexisNexis,2010), p.828:citing Dean v Prince (1954) 1Ch409.
[38] [2015] 1 LNS 1435.
[39] Ali [n14], p.17: Question 9.
[40] [2017] MLJU 2381
[41] Kuasatek (M) Sdn Bhd v HCM Engineering Sdn. Bhd and other appeals [2018] MLJU 1919
[42] Integral Acres Sdn Bhd v BCEG International (M) Sdn Bhd and other cases [2021] MLJU 1889
[43] Sunissa Sdn Bhd v Kerajaan Malaysia & Anor [2020] MLJU 283
[44] The Malaysian Lawyer [n 49].
[45] The Malaysian Lawyer [n 49].
[46] Try everything you can in order to do something or to solve a problem, <https://languagecaster.com/football-cliche-throw-the-kitchen-sink>, accessed 1 Nov 2022.
[47] [2020] 1 LNS 145
[48] [2018] MLJU 1542
[49] Ali [n14], p.14: Question 2.
[50] Ali [n14], p.14: Question 3.
[51] The Malaysian Lawyer [n 49].
[52] Ali [n14], p.16: Question 7; p.15: Question 6.
[53] Chan [n 29].
[54] Ali [n14], p.18: Question 10.
[55] Ali [n14], p.22: Question 18.
[56] Ali [n14], p.23: Question 19.
[57] The Malaysian Lawyer [n 49].
[58] COA J. Lee Swee Seng’s opening remark on ‘CIPAA conference in Asia ADR Week 2022’, AIAC Kuala Lumpur; see also <https://www.linkedin.com/posts/asian-international-arbitration-centre_asiaadrweek2022-aadrweek2022-aiaccompassus-activity-6984378475428159489-jjZi/>, accessed 1 Nov 2022.
[59] [2017] MLJU 146
[60] KLIA Associates Sdn Bhd v Mudajaya Corporation Berhad [2020] 1 LNS 1253
[61] [2018] MLJU 772.
[62] [2020] MLJU 972
[63] [1974] AC 727
[64] [2021] MLJU 1964
[65] [2020] 1 LNS 1105
[66] Borneo Post,‘Urgent need to appoint AIAC director–SLS’, (7 Jul 2020) <https://www.theborneopost.com/2020/07/07/urgent-need-to-appoint-aiac-director-sls/>,accessed 15 Dec 2021.
[67] Edge,’AIAC director resigns over MACC investigation’, (22 Nov 2018), <https://www.theedgemarkets.com/article/aiac-director-resigns-over-macc-investigation>, accessed 20Dec2021.
[68] [2021]Civil Appeal: 01(f)-38-12-2020(W), at 112.
[69] Rajoo [n 93].
[70] Temporary premises of a sovereign in a foreign jurisdiction were perceived to be an extension of the territory of the sending State.
[71] Immunities as being necessary for the mission to perform its functions.
[72] Mission personifies the sending State.
[73] AALCO, ‘Immunity of State Officials From Foreign Criminal Jurisdiction’, (10 Apr 2012), IMLE <https://www.aalco.int/Background%20Paper%20ILC%2010%20April%202012.pdf>, accessed 27 Dec 2021.
[74] Rajoo [n 93].
[75] Malaysiakini,‘Thomas: Legal immunity puts ex-AIAC director above rulers’,(6Nov2021) <https://www.malaysiakini.com/news/598081>,accessed 27Dec2021;Thomas,‘My Story:Justice in the Wilderness’(GerakBudaya,2021)pp391-399.
[76] Lam [n18], p.13.
[77] [2018] MLJU 772
[78] <https://www.malaysiakini.com/news/465089>, accessed 1 Nov 2022.
[79] Ibid.
[80] “AIAC director resigns over MACC investigation”, Edge Markets, <https://www.theedgemarkets.com/article/aiac-director-resigns-over-macc-investigation>, accessed 1 Nov 2022.
[81] [2020] 4 CLJ 201; also see Prestij Mega Construction v Estate of Vinayak Pradhan BA-24C-13-02/2020 and BA-24C-25-03/2020
[82] Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd [2021] 8 MLJ 275; Acoustic & Lighting System v Les Engineering
[83] Ong Teik Beng (t/a MJV Construction) v Wow Hotel Sdn Bhd [2022] 8 MLJ 10 
[84] First Commerce v Titan Vista [2021] MLJU 376.
[85] [2022] MLJU 2124
[86] [2022] 9 MLJ 79 
[87] Perbadanan Perwira Harta Malaysia v Kuntum Melor Sdn Bhd and another case [2021] MLJU 1593
[88] The Malaysian Lawyer [n 49].
[89] AIAC Annual Report 2021-2022.
[90] Ali [n17], p.17: cited Geoff Bayley’s experience in New Zealand adjudication.
[91] [2018] MLJU 1542
[92] AIAC/D/ADJ-4341-2022
[93] HST Engineers v PauYuan Sdn Bhd [2022], unreported.
[94] Premaraj, ‘CIPAA Webinar series on Practical Tips and Must-Have Records for Employers to Succeed in CIPAA’ (16 Jun 2022), <https://www.linkedin.com/posts/belden-advocates-%26-solicitors_welcome-you-are-invited-to-join-a-webinar-activity-6933256995030351872-yBrg?>, accessed 1 Nov 2022.
[95] [2019] (BTU-24C-2-7-2018).
[96] ADJ-4210-2022
[97] [2021] 11 MLJ 50
[98] 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”.
[99] 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.
[100] ss 13, 15 and 16 CIPAA 2012
[101] [2019] (BTU-24C-2-7-2018).
[102] Encorp Iskandar Development Sdn Bhd v. Konsortium Ipmines Merz Sdn Bhd [2020] 1 LNS 1129
[103] Perbadanan Perwira Harta Malaysia v Kuntum Melor Sdn Bhd and another case [2021] MLJU 1593
[104] Granstep Development Sdn Bhd v Tan Chong Heng & Ors [2020] MLJU 2364
[105] [2019] 1 LNS 173
[106] [2022] 7 CLJ 313
[107] Celtex Supreme Sdn Bhd v Mega Bina Garisan Sdn Bhd [2021] 1 LNS 630
[108] [2021] MLJU 1382
[109] Movement Control Order (‘MCO’): measures taken under the Prevention and Control of Infectious Diseases Regulations 2020 [PU(A)91/2020]
[110] [2017] AMEJ 0538
[111] E.A Technique v Malaysia Marine and Heavy Engineering [2020] WA-24C-96-06/2019
[112] Sandrasegaran and other, ‘E.A Technique (M) Berhad (“EAT”) v. Malaysia Marine and Heavy Engineering Sdn Bhd (“MMHE”)’, (18 Jul 2020), <https://mohanadass.com/publications/articles/ea-technique-m-berhad-eat-v-malaysia-marine-and-heavy-engineering-sdn-bhd-mmhe.html>, accessed 1 Nov 2022.
[113] Rajoo and others,‘Standard Form of Building Contract Compared’(LexisNexis,2022),p456: cited FIDIC RB2017, sub cl.3.7.5, prescribed the Officer’s decision, in form is ‘expert determination’, similarly to PWD203A.
[114] Lee [n 83].
[115] Mirrored the findings of Pryles, ‘Limits to Party Autonomy in Arbitral Procedure,’ (2007), 24 AJA, pp.327–339.
[116] Ali [n14], p.7-10.
[117] Macly Equity Sdn Bhd v Prestij Mega. Construction Sdn Bhd [2021] MLJU 537
[118] [2019] MLJU 1690
[119] PJ Midtown Development Sdn Bhd v Pembinaan Mitrajaya Sdn Bhd and another summons [2020] MLJU 1432
[120] Puncak Niaga Construction Sdn Bhd v Mersing Construction &. Engineering Sdn Bhd and other cases [2021] MLJU 1824
[121] Ali [n14], p.21: Question 16.
[122] Ali [n14], p.21: Question 15.
[123] [2021] MLJU 1889
[124] Ali [n14], p.21: Answer15.
[125] Ali [n14], p.21: Answer17.
[126] Yang, ‘Hong Kong's Contractual Security of Payment (SOP) Regime for Public Works Contracts‘, (2021), <https://www.lexology.com/library/detail.aspx?g=e948ad6b-fa58-4fcb-a8fe-4ae811406024>, accessed 1 Nov 2022.
[127] Ali [n14], p.21 Question 14.
[128] MRCB [n 72].
[129] Ireka Engineering & Construction Sdn Bhd v. Tri Pacific Engineering Sdn Bhd and another [2020] MLJU 548
[130] Dekinjaya Builder Sdn Bhd v Chong Lek Engineering Works Sdn Bhd and another case [2020] MLJU 2455
[131] Mei He Development Sdn Bhd v Eosh Industries Sdn Bhd [2021] MLJU 519
[132] Ali [n14], p.20 Question 13.
[133] Ali [n14], p.18 Question 10; p.17-18 Answer 9.
[134] Harban, ‘CIPAA conference in Asia ADR Week 2022’, AIAC Kuala Lumpur.
[135] Ali [n14], p.16 Question 8.
[136] Ali [n14], p.21 Answer 14.
[137] Ali [n14], p.14 Answer 3; p.15 Answer 5; p.16 Answer 7.
[138] Ali [n14], p.23 Answer 19.
[139] Ali [n14], p.19 Answer 12.
[140] Dispute Resolution Board (DRB)/ Dispute Resolution Advisor (DRA)
[141] Ali [n14], p.19 Answer 11; p.22 Answer 18.
[142] Cheah, ‘Adjudication’, (1 Aug 2019), Joint Courses on Alternative Dispute Resolution for Practitioners by IEM + MIArb + RISM + PAM, p.24. 

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.

---------------------------------------------------------------------------
[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 

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?  

--------------------------------------------------------
[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

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’.

---------------------------------------------------
[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

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’.

------------------------------------------------------------------------------
[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

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].

-------------------------------------------------------------------------
[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]

------------------------------------

[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

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.
 
 ----------------------------------------

[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