CONSTRUCTION INDUSTRY PAYMENT AND ADJUDICATION ACT 2012

Construction Industry Payment and Adjudication laws OF MALAYSIA Act 746 construction industry payment and adjudication act 2012 1 2 Laws of Malaysia Date of Royal Assent Act 746 ... ... 18 June 2012 Date of publication in the Gazette ... ... ... 22 June 2012 Publisher’s Copyright C percetakan nasional malaysia berhad All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording and/or otherwise without the prior permission of Percetakan Nasional Malaysia Berhad (Appointed Printer to the Government of Malaysia). Construction Industry Payment and Adjudication laws of malaysia Act 746 construction industry payment and adjudication act 2012 ARRANGEMENT OF sections Part I PRELIMINARY Section 1. Short title and commencement 2. 3. Application Non-application 4. Interpretation Part II ADJUDICATION OF PAYMENT DISPUTES 5. Payment claim 7. Right to refer dispute to adjudication 6. Payment response 8. Initiation of adjudication 9. Adjudication claim 11. Adjudication reply 10. 12. 13. Adjudication response Adjudication and decision Effect of adjudication decision 14. Consolidation of adjudication proceedings 15. Improperly procured adjudication decision 16. Stay of adjudication decision 17. Withdrawal and recommencement of adjudication proceedings 19. Adjudicator’s fees and expenses, etc. 18. Costs of adjudication proceedings 20. Confidentiality of adjudication 3 4 Laws of Malaysia Act 746 Part III ADJUDICATOR Section 21. Appointment of adjudicator 22. Appointment of adjudicator by parties 23. Appointment of adjudicator by Director of the KLRCA 24. Duties and obligations of the adjudicator 25. Powers of the adjudicator 26. Power of adjudicator not affected by non-compliance 27. Jurisdiction of adjudicator Part IV ENFORCEMENT OF ADJUDICATION DECISION 28. Enforcement of adjudication decision as judgment 29. Suspension or reduction of rate of progress of performance 30. Direct payment from principal 31. Concurrent exercise of remedies Part V ADJUDICATION AUTHORITY 32. Functions of KLRCA 33. Policy directions Part VI GENERAL 34. Immunity of adjudicator and KLRCA 35. Prohibition of conditional payment 36. Default provisions in the absence of terms of payment 37. Relationship between adjudication and other dispute resolution process Construction Industry Payment and Adjudication Part VII MISCELLANEOUS Section 38. Service of notices and documents 39. 40. Regulations Exemption 41. Savings 5 6 Laws of Malaysia Act 746 7 Construction Industry Payment and Adjudication laws of malaysia Act 746 construction industry payment and adjudication act 2012 An Act to facilitate regular and timely payment, to provide a mechanism for speedy dispute resolution through adjudication, to provide remedies for the recovery of payment in the construction industry and to provide for connected and incidental matters. [ ] ENACTED by the Parliament of Malaysia as follows: Part I PRELIMINARY Short title and commencement 1. (1) This Act may be cited as the Construction Industry Payment and Adjudication Act 2012. (2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette. Application 2. This Act applies to every construction contract made in writing relating to construction work carried out wholly or partly within the territory of Malaysia including a construction contract entered into by the Government. 8 Laws of Malaysia Act 746 Non-application 3. This Act does not apply to a construction contract entered into by a natural person for any construction work in respect of any building which is less than four storeys high and which is wholly intended for his occupation. Interpretation 4. In this Act, unless the context otherwise requires— “adjudication decision” means the decision made by an adjudicator under subsection 12(2); “adjudication proceedings” means the process of adjudication under this Act; “adjudicator” means an individual appointed to adjudicate a dispute under this Act; “claimant” means an aggrieved party in a construction contract who initiates adjudication proceedings; “construction consultancy contract” means a contract to carry out consultancy services in relation to construction work and includes planning and feasibility study, architectural work, engineering, surveying, exterior and interior decoration, landscaping and project management services; “construction contract” means a construction work contract or construction consultancy contract; “construction work” means the construction, extension, installation, repair, maintenance, renewal, removal, renovation, alteration, dismantling, or demolition of— (a) any building, erection, edifice, structure, wall, fence or chimney, whether constructed wholly or partly above or below ground level; (b) any road, harbour works, railway, cableway, canal or aerodrome; (c) any drainage, irrigation or river control work; Construction Industry Payment and Adjudication 9 (d) any electrical, mechanical, water, gas, oil, petrochemical or telecommunication work; or (e) any bridge, viaduct, dam, reservoir, earthworks, pipeline, sewer, aqueduct, culvert, drive, shaft, tunnel or reclamation work, and includes— (A) any work which forms an integral part of, or are preparatory to or temporary for the works described in paragraphs (a) to (e), including site clearance, soil investigation and improvement, earth-moving, excavation, laying of foundation, site restoration and landscaping; and (B) procurement of construction materials, equipment or workers, as necessarily required for any works described in paragraphs (a) to (e); “construction work contract” means a contract to carry out construction work; “contract administrator” means an architect, engineer, superintending officer or other person howsoever designated who administers a construction contract; “Government” means the Federal Government or the State Government; “High Court” means the High Court in Malaya or the High Court in Sabah and Sarawak, as the case may require; “KLRCA” means the Kuala Lumpur Regional Centre for Arbitration; “Minister” means the Minister charged with the responsibility for works; “non-paying party” means a party against whom a payment claim is made pursuant to a construction contract; “payment” means a payment for work done or services rendered under the express terms of a construction contract; 10 Laws of Malaysia Act 746 “principal” means a party who has contracted with and is liable to make payment to another party where that other party has in turn contracted with and is liable to make payment to a further person in a chain of construction contracts; “respondent” means the person on whom the notice of adjudication and adjudication claim has been served; “site” means the place where the construction work is affixed whether on-shore or off-shore; “unpaid party” means a party who claims payment of a sum which has not been paid in whole or in part under a construction contract; “working day” means a calendar day but exclude weekends and public holidays applicable at the State or Federal Territory where the site is located. Part II ADJUDICATION OF PAYMENT DISPUTES Payment claim 5. (1) An unpaid party may serve a payment claim on a nonpaying party for payment pursuant to a construction contract. (2) The payment claim shall be in writing and shall include— (a) the amount claimed and due date for payment of the amount claimed; (b) details to identify the cause of action including the provision in the construction contract to which the payment relates; (c) description of the work or services to which the payment relates; and (d) a statement that it is made under this Act. Construction Industry Payment and Adjudication 11 Payment response 6. (1) A non-paying party who admits to the payment claim served on him shall serve a payment response on the unpaid party together with the whole amount claimed or any amount as admitted by him. (2) A non-paying party who disputes the amount claimed in the payment claim, either wholly or partly, shall serve a payment response in writing on the unpaid party stating the amount disputed and the reason for the dispute. (3) A payment response issued under subsection (1) or (2) shall be served on the unpaid party within ten working days of the receipt of the payment claim. (4) A non-paying party who fails to respond to a payment claim in the manner provided under this section is deemed to have disputed the entire payment claim. Right to refer dispute to adjudication 7. (1) An unpaid party or a non-paying party may refer a dispute arising from a payment claim made under section 5 to adjudication. (2) The right to refer a dispute to adjudication shall only be exercised after the expiry of the period to serve a payment response as specified under subsection 6(3). (3) A dispute referred to adjudication under this Act is subject to the Limitation Act 1953 [Act 254], Sabah Limitation Ordinance [Cap. 72] or Sarawak Limitation Ordinance [Cap. 49] as the case may be. Initiation of adjudication 8. (1) A claimant may initiate adjudication proceedings by serving a written notice of adjudication containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent. 12 Laws of Malaysia Act 746 (2) Upon receipt by the respondent of the notice of adjudication, an adjudicator shall be appointed in the manner described in section 21. (3) A party to the adjudication proceedings may represent himself or be represented by any representative appointed by the party. Adjudication claim 9. (1) The claimant shall, within ten working days from the receipt of the acceptance of appointment by the adjudicator under subsection 22(2) or 23(2), serve a written adjudication claim containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent. (2) The claimant shall provide the adjudicator with a copy of the adjudication claim together with any supporting document within the time specified under subsection (1). Adjudication response 10. (1) The respondent shall, within ten working days from the receipt of the adjudication claim under subsection 9(1), serve a written adjudication response which shall answer the adjudication claim together with any supporting document on the claimant. (2) The respondent shall provide the adjudicator with a copy of the adjudication response together with any supporting document within the time specified under subsection (1). (3) If the respondent fails to serve any adjudication response, the claimant may proceed with the adjudication after the expiry of the time specified under subsection (1). Adjudication reply 11. (1) The claimant may, within five working days from the receipt of the adjudication response, serve a written reply to the adjudication response together with any supporting document on the respondent. Construction Industry Payment and Adjudication 13 (2) The claimant shall provide the adjudicator with a copy of the adjudication reply together with any supporting document within the time specified under subsection (1). Adjudication and decision 12. (1) The adjudicator shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under section 25. (2) Subject to subsection 19(5), the adjudicator shall decide the dispute and deliver the adjudication decision within— (a) forty-five working days from the service of the adjudication response or reply to the adjudication response, whichever is later; (b) forty-five working days from the expiry of the period prescribed for the service of the adjudication response if no adjudication response is received; or (c) such further time as agreed to by the pa