PRE-QUALIFICATION FOR STAY
According to the Court in Foster Wheeler E & C ( Malaysia ) Sdn Bhd v Arkema Thiochemicals Sdn Bhd & Another Case [ 2015 ] 1 LNS 632 , the expression “ pending final determination by arbitration or the court ”, which is a condition for a stay of an adjudication decision under section 16 ( 1 )( b ) of CIPAA , requires the parties to have already commenced arbitration or court proceedings . In that case , the contract provided for a multi-tiered dispute resolution . At the material time , parties were at the first stage of dispute resolution whereby negotiations were ongoing but notice of arbitration had yet to be issued . In fact , any issuance of notice of arbitration prior to the completion of the negotiations would be regarded as pre-mature . In the circumstances , the Court held that there was no pending arbitration and that the applicant had failed to satisfy the requirements for a stay under section 16 ( 1 )( b ). This decision will have an adverse impact on multitiered dispute resolution clauses . adjudicator which is limited to the disputes raised under sections 5 and 6 of CIPAA i . e . the payment claim and payment response . Any extension of the adjudicator ’ s jurisdiction beyond matters in the payment claim and payment response will have to be by way of a written agreement pursuant to section 27 ( 2 ) of CIPAA .
However , it is interesting to note that the Court of Appeal in View Esteem Sdn Bhd v Bina Puri Holdings Sdn Bhd [ 2016 ] 6 MLJ 717 seems to suggest that the adjudicator ’ s jurisdiction in relation to matters not raised in a payment response can be regularised pursuant to section 26 of CIPAA , notwithstanding that there is no express agreement between the parties under section 27 ( 2 ). This could mean that a party could avail itself of section 26 and raise new claims or defences in its adjudication claim or adjudication response by formally moving the adjudicator to invoke section 26 . This however is not consistent with section 27 ( 2 ) and the position in this regard remains uncertain .
LIMIT OF ADJUDICATOR ’ S JURISDICTION
An adjudicator ’ s jurisdiction has been held to be limited only to matters referred to in the payment claim and payment response . This was decided in the High Court in View Esteem where the Judge held that such limitation is prescribed in section 27 ( 1 ) of CIPAA . The processes that take place after the payment claim and payment response , including the filing of the adjudication claim , adjudication response and adjudication reply are substantially formal manifestations of the dispute containing greater details of the claim , response , or reply , as the case may be , of the payment claim and payment response .
Similarly , in Bina Puri , the High Court Judge in considering the argument raised by the applicant that the adjudicator had committed an error in holding that he had no jurisdiction under CIPAA to decide on the applicant ’ s counterclaim which was raised in its adjudication response but not in its payment response , concluded that section 27 of CIPAA clearly circumscribes the jurisdiction of the
PRINCIPAL TO MAKE DIRECT PAYMENT
As long as the necessary written request required under section 30 of CIPAA is issued to the principal , the principal is obliged to make payment to the party who obtained the adjudication decision in its favour . It is irrelevant if the principal is not a party to the adjudication proceedings or does not have knowledge of the adjudication proceedings . This was decided in Murni Environmental Engineering Sdn Bhd v Eminent Ventures Sdn Bhd & Anor and Other Suits [ 2016 ] MLJU 691 .
CONCLUSION
Although statutory adjudication in Malaysia is still very much in its infancy , it is evident from the cases highlighted above that a body of local decisions is steadily being built up to assist in the interpretation of the provisions of CIPAA .
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