AIAC Adjudicators Continuing Competency Development (CCD)

Workshop Series

Event : AIAC Adjudicators Continuing Competency Development (CCD) Workshop

Series - Handling Jurisdictional and Natural Justice Challenges/Issues
Date : 31st July 2021
Time : 9.00 am – 1.00 pm

1. Question: Payment & Adjudication Claim was served for RM200mil due to non-
payment and Payment & Adjudication Response was replied in entirety denied. In the
midst of proceedings, Respondent issued cheque payment RM120mil to Claimant
didn't state which items were admitted.
Answer: The adjudicator needs to make inquiries as to what claims have been
admitted and settled.

2. Question: Does the Adjudicator has the jurisdiction to decide which part of the
Payment & Adjudication Claim are in dispute or to continue?
Answer: Yes, the adjudicator can decide this based on the Adjudication Response. If
not sure, ask for clarifications.

3. Question: To determine jurisdiction, is it not so much going into the merits as that will
involve the bases of the dispute, rather to deal only the preliminary issue of whether
the matter can come within CIPAA?
Answer: Sometimes jurisdictional challenges require some merits to be considered.
Such as whether the payment was due at the date when the Payment Claim was
issued.

4. Question: Once Adjudicator wrote his decision that he has no jurisdiction. Will
Adjudicator get the full fees?
Answer: If there has been a consideration of the merits such as the payment clauses
in the contract to ascertain when the payment was due and then to conclude that the
sum was not due on the date when the payment claim was issued, then I believe the
adjudicator should be entitled to his/her fees. However purely on core jurisdiction, there
is a danger that there may be an issue.

5. Question: Respondent challenged the proceedings to be withdrawn as Adjudicator

has no jurisdiction due to the case has been settled.
Answer: Whether the case has been settled is a question of merit rather than
jurisdiction. The adjudicator must consider the merits to determine whether there is a
settlement and therefore whether the Claimant is or is not entitled to the sum claimed
anymore. This is a decision that can be written into the adjudication decision.
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6. Question: Could panellists share the adjudication cases stated in today workshop?
Answer: The case names have been referred. I believe you can then find them on
your research platform. Providing all these case copies at this time is not possible.
Sorry.

7. Question: Can an unstamped Contract allows go for adjudication or Arbitration

proceeding?
Answer: Interesting question. My view is that an unstamped contract is still a valid
contract.

8. Question: Section 5 requires a due date to be stated otherwise the adjudicator doesn't
have jurisdiction. The fact is in our Malaysia Construction industry many
subcontractors particularly the labour subcon. don't have acknowledge of laws or
CIPAA requirements. As far as they are concern, they only know payments are due
after certain days says 2 weeks or 1 month after their submission of their claims to
Main Contractor. Besides Section 8 (3) doesn't require such subcon to be represented
by legal or technical personnel. Hence the adjudicator should be allowed to use S25
particularly subsection (i), (j) to read into the claim on the due date based on the sub-
contract terms in case of dismissing it as no jurisdiction and dismiss the claim
Answer: These are the rules of the adjudication proceedings. There has to be some
formality for a legal process to be validly commenced. Lay contractors need to get help
where they have to. It is still better than before where the only options were Court or
arbitration.

9. Question: Matter of interpretation may differ between adjudicators, why should there
be res judicata applicable in such situation?
Answer: That is the law in order to ensure no conflicting adjudication decisions and
contradictions.

10. Question: How does an adjudicator aware that there was an earlier adjudication
decision on the same contract but different payment claims?
Answer: If parties don’t raise it, then the adjudicator is not bound by res judicata.

11. Question: Is there a case law to say res judicata applies to adjudicators?
Answer: Yes, many. Can't remember off-hand.

12. Question: What would you think of including a term in the standard terms of
appointment that AIAC and Adjudicator fees are non-refundable and payable even if
the Adjudicator is later found not to have jurisdiction?
Answer: This is not a contractual question but rather a legal one. So parties can't
agree on what legally cannot be done. Take an example if there is no Core Jurisdiction,
there could never have been a CIPAA and all matters done under CIPAA including the
standard terms of appointment is technically void. That is why this is an extremely
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controversial issue but so far the Courts have not suggested that fees have to be
returned even if there was no core jurisdiction.

13. Question: Do you have jurisdiction to consider a defense of set off for defects raise
by employer in adjudication response if the right to set off under clause 30.4 of the
PAM 2006 has not crystalized on the date of Payment Response but crystalized before
the date of adjudication response?
Answer: There is a decision from J. Lim Chong Fong which suggest that the right of
set-off must crystalise before the Notice of Adjudication. There are however other
decisions locally and from England that states the right of set-off must have crystalised
and exercised at the time when the progress claim had become due which would be
even before the Payment Claim is issued. My personal view is that the latter is correct
since the decision in adjudication is whether the sums ought to have been paid by the
Respondent at the date when the sum had become due under the construction
contract.

14. Question: 2 adjudications (involved same contract) on going together at the same time
with 2 adjudicators involved. can the claimant refer the faster decision to the later one
without the consent of the parties? isn’t it private? what if the second adjudicator
receive it?
Answer: It is not private if it arises from the same parties, the same project and res
judicata is being argued.

15. Question: If the adjudicator does not have the email address of the respondent or
claimant and AIAC fails to provide the same, can the adjudicator requested it from the
respondent/claimant via telephone call?
Answer: If possible, try to get AIAC to ask the parties rather than you making a phone
call. However, if you really have to, then make sure you call both and tell both that you
have called each one merely to get the e-mail. That is the next best thing you can do.

16. Question: If there is uncertainty as to which document [due to exchange of numerous

documents between parties] is the concluded Construction Contract, can the
Adjudicator proceed with the adjudication proceeding and decide on which terms to
apply?
Answer: As adjudication is an inquisitorial process, please ask the parties and get
clarifications and certainty. You ought to be making a decision on the accurate
contractual documents. Sometimes part of the dispute unfortunately includes a dispute
on what is or is not part of the Contract documents. In that context, you also have to
decide on this sub-issue in order to decide on the claim.

17. Question: refer to Q above, how about the same parties but different projects?
Answer: Answered, different contacts cannot be considered. Same single contract but
2 works for 2 projects can be considered.
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18. Question: Can an adjudicator unilaterally approve an EOT application by a party

without seeking the other party consent in the dispute?
Answer: I always ask the other party for their views but even if they object, yes I can
decide and allow EOT as I have the discretion to do so providing I provide reasonable
reasons. However, I must not contradict myself when the other party later ask for some
EOT. Example Covid-19 impact has been a fair and reasonable reason to allow some
EOT and I don't think you can be criticized for this.

19. Question: Can an adjudicator deny an EOT application to ensure smooth conduct of
adjudication proceeding, despite both parties agreeing to it? Will it be against to natural
justice to either party?
Answer: Can be refused even if both parties agreed unless it turns out to be extremely
unreasonable to do so. My advice generally is that if parties agree, allow it as it is the
safer approach.

20. Question: If a Respondent submitted an Adjudication Response later than the

prescribed period to submit, without any request for EOT, would it be wrong for the
Adjudicator to allow the submission pursuant to his powers under S.25 & S.26 and at
the same time allow the same EOT be granted to the Claimant although the Claimant
also did not make an EOT application to submit their Adjudication Reply?
Answer: I believe that you can under S.26 but there may be a problem under S.25(p)
since the words "as required" is used. I think as an adjudicator, it is a better approach
to the write to the party that has lodged the document late stating that if there is no
application for EOT with good grounds, you will not consider the same. Then if there
is still no application for EOT, you can then ignore the same. I would be reluctant to
refuse EOT on the key documents like the Adjudication Claim, Response and Reply.

21. Question: If there are provision under the contract for the set-offs raised by the
Respondent, but the set-off amount was never evaluated and no notification given to
the Claimant as per the procedural requirement under the Contract, can these "set-off"
be considered? Are they still considered as rightful "set-off" to be considered in an
adjudication?
Answer: If notice of set-off is a condition precedent to exercising the set-off, then it
cannot be considered anymore for failure to comply with the condition precedent.

22. Question: Is reducing an excessive amount of party and party cost claimed by a party
tent amount to a breach of natural justice?
Answer: No, the decision on cost is totally up to the discretion of the adjudicator as
long as the decision follows the principle that costs follow the event.

23. Question: Back to my earlier question that the losser who asking for a stay of
adjudication decision but still has to wait for court order for further action. I my view
AIAC shall have a right to ask all decision asking for a stay shall deposit the adjudicated
sum with AIAC - this is a loop hole that the losser trying to get rid of the responsibility
to make payment. please advise AIAI if possible. Thanks
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Answer: The power to require a temporary security pending outcome of the stay
application can only be exercised by the Court and not AIAC.

24. Question: In your view, if the Adjudicator proceeds with the determination and
adjudication of the contractual terms between parties [despite the fact that the
contractual terms cannot be identified conclusively] and decides on the payment terms,
would this tantamount to an excess of jurisdiction?
Answer: No, this would be a decision on merit providing any view that the adjudicator
takes on what is the contract term applicable, the adjudicator has allowed the parties
a chance to address this matter. Cannot be a consideration without parties chance to
address, however, if it is simply a finding on an interpretation of a contract term, this is
a question of law and possibly does not need parties submission.

25. Question: In cases where the Respondent refuses to participate in the adjudication
without serving any payment response nor adjudication response, can the adjudicator
draw adverse inference against the respondent to arrive at his decision or would this
be a breach of natural justice?
Answer: In this case, the adjudicator needs to be still satisfied that the Claimant is
entitled to the claim and not just rely on adverse inference to allow the claim. However,
if there are any factual issues where correspondences from the Respondent produced
in the Adjudication Claim contradicts the Claimant's position, you can use adverse
inference for those sub-issues findings.

26. Question: I knew that but in our view it is a loop hole. Otherwise, Singapore will not
practice it. we found that a few losser try to use the stay to drag for the payment.
Answer: Need parliament to amend CIPAA as AIAC cannot do so otherwise. In the
meanwhile, Courts should do this though as otherwise applications for setting aside
and stay take some time to be disposed and in the meanwhile the Claimant has no
security on the adjudicated sum.

27. Question: it is our interest to make the procedure not practical and enforceable.
Answer: Of course not, but this is not a question of mere procedure in the hands of
AIAC.

28. Question: Is loss and expense claim, e.g. prolongation costs, adjudicatable under
CIPAA?
Answer: Yes. Decision of J. Lee Swee Seng. They are still claims that are related to
work done.

29. Question: Adjudicator made inquisitorial to Respondent to ascertain curtained

documents to be submitted, however, Respondent appealed to submit after MCO lifted
due to WFH. Claimant provided (copied to Respondent) the authentic documents as
required by Adjudicator and demand to proceed with the proceedings without delay.
Adjudicator wrote back to Respondent the documents submitted by Claimant were
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considered and proceed under S26 of CIPAA. Were the conducts of Adjudicator
considered breach of "Natural Justice"?
Answer: No providing that the Respondent was given an opportunity to respond to the
documents submitted by the Claimant and comment whether they are the correct
documents or are there more documents.

30. Question: If Claimant put in additional evidence in Adjudication Reply and Adjudicator
do not allow Respondent to response, is this consider a breach of natural justice?
Answer: If this additional evidence is pertinent to the final outcome, it could not have
been foreseen by the Respondent based on matters arising between the parties before
the adjudication began and the Respondent asked for a chance to respond, then there
is a danger of breach of natural justice. However, as a primary position, an adjudicator
is not bound to allow further submissions after the adjudication reply.

31. Question: If the Adjudicator had not asked parties to address on the inconclusive
contractual terms and had unilaterally proceeded to decide without any submission
allowed, would it then be an excess of jurisdiction and possibly breach of natural
justice?
Answer: If it is purely a decision on the interpretation of a contract provision, then this
is a decision on law and fact. T adjudicator need not consider parties submissions
although it is wise to do so.

32. Question: It is the last day to deliver your decision and you are furiously typing. You
receive fresh submissions / evidence from Respondent at 3pm. At first glance the
submissions / evidence appear to be significant and material. No time to ask the
Claimant for its position (although you know they would object if given the opportunity).
What should you do?
Answer: Do not consider and reject it.

33. Question: If claimant made calculation error in the payment claim, which later raised
during adjudication response, do the adjudicator has the jurisdiction to allow such
amendment and continue the proceeding
Answer: Yes, if it reduces the entire claimed amount. There may be a problem if it
increases the claimed amount in the Payment Claim.

34. Question: Totally agreed, but the question is shall AIAC to initiate it to the Parliament?
who shall take the lead? Bar? AIAC? we cannot just wait and look at each other.
Answer: Answered the best that I can.

35. Question: When there is a clear lack of evidence in parties’ Adjudication Pleadings,
would the Adjudicator be in breach of Natural Justice if he states the same in his
decision but never actually seeks clarification/further evidence from Parties before
writing his decision.
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Answer: No breach of natural justice if the decision is that a party failed to discharge
its burden or standard of proof. However, if the party ask to be allowed to put in
evidence and you curtail the number of documents that can be produced, then there
is a danger of breach of natural justice.

36. Question: In adopting Circular CIPAA 03 KLRCA’s Guideline [on the meaning of
“Construction Contract Made in Writing”], can the Adjudicator proceed unilaterally to
pick and choose portions of numerous documents exchanged between parties to form
terms of contract?
Answer: Providing it can be justified as proper contract documents that show the
contract was indeed in writing.

37. Question: I see, but what is the next step or approach? who can do all this?? JKR? or
who has the right to request for the amendment?
Answer: Stakeholders pushing AG's chambers. At this juncture, I do not think the
powers that be at the moment will be bothered about CIPAA unfortunately.

38. Question: A construction contract with payment term that payment would only be
made by the developer to the contractor upon receipt of payment from the HDA
account (from the sales of the units). Both parties collectively promote the sales of the
units. Do you think it would fall under the ambit of CIPAA?
Answer: Yes, it is still a payment for construction works. However, the conditional
payment which is void based on S.35.

39. Question: On question 2 regarding loss and expense, is loss and expense claim
"Payment Claim"?
Answer: Yes, it qualifies as a claim