Statutory adjudication through the Construction Industry Payment & Adjudication (CIPA) Act 2012 could be key to curbing payment defaults in the construction industry, said director of the Kuala Lumpur Regional Centre for Arbitration (KLRCA), Datuk Sundra Rajoo.
He said the construction industry in Malaysia, like in other developing nations, had had a long history of lengthy payment times, causing many contractors to suffer from cashflow problems thus delaying projects.
Statutory adjudication is a means of dispute resolution that allows a party who is owed monies under a construction contract to promptly obtain paymemnt from the non-paying party based on an asssesment of the merits of the claim by an appropriately qualified and indepedent industry expert, the adjudicator.
KLRCA is a non-profit, non-governmental international arbitral institution established in 1978 under the auspices of the Asian-African Legal Consultative Organisation.
“The legislation under CIPA Act 2012 which will be enforced, provides for compulsory statutory adjudication and aims to facilitate cash flow in the industry,” he said during his opening address at a KLRCA seminar yesterday.
The CIPA Act is expected by the industry to be enforced by next year, putting Malaysia among a small select group of countries with similar enactment Singapore, Australia, New Zealand and the United Kingdom.
Rajoo said under section 32 of the CIPA Act, the responsibilities of KLRCA as the adjudication authority in Malaysia include setting the competency standards and criteria of adjudicators through training and certification. “KLRCA is also tasked to determine the standard terms of appointment of an adjudicator and their fees, and offer administrative support for the efficient conduct of adjudication,” he added.