On 15th of April 2014, the Construction Industry Payment and
Adjudication Act 2012 (CIPAA) came into effect. As an alternative
to the lengthy and expensive processes of arbitration or
litigation, CIPAA establishes a statutory adjudication mechanism to
settle disputes in the construction industry.
The passage of CIPAA represents an effort to address challenges
that frequently arise in construction projects, such as delays in
completion or project abandonment due to issues with underpayment,
late payment, or non-payment. In other words, CIPAA encapsulates
the core principle of “Pay now, Argue
later”1.
The applicability of CIPAA
Whether the contract is made with the government or a private
party, CIPAA is applicable to all written construction contracts in
relation to construction work carried out entirely or partially
within Malaysian territory2.
