International Construction Law Review
JACK-IN-PILE (M) SDN BHD V BAUER (MALAYSIA) SDN BHD AND ANOTHER APPEAL1
Mohanadass Kanagasabai, Managing Partner
Mohanadass Partnership
INTRODUCTION
This decision by the Malaysian Apex Court concerned the question whether the Malaysian Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) is to be construed as having retrospective or prospective applicability.
Two questions of law were raised:
- (i) Whether CIPAA applies to construction contracts entered into before the coming into operation of the Act, i.e. 15 April 2014; and
- (ii) If the answer to question (i) was in the affirmative, did it follow that section 35 of CIPAA which invalidated back to back payment arrangements, should apply to construction contracts entered into before the coming into operation of the Act.
BACKGROUND CONTEXT
In appreciating the impact of this decision, it is relevant to note that CIPAA was enacted in Malaysia as a new statutory dispute resolution mechanism designed to temporarily resolve disputes affecting cash flow in the construction industry.
Soon after its enactment, the question whether it was retrospective or prospective in effect was answered in favour of retrospectivity by a decision of the High Court in Uda Holdings Bhd v Bisraya Construction Sdn Bhd and Another and Another Case
2 (“Uda Holdings Bhd”). This decision was upheld by the Court of Appeal, but that case was not taken further to the Federal Court, the apex court in Malaysia.
In the intervening years, on the basis of Uda Holdings, CIPAA had been applied retrospectively in scores of cases and held to be applicable to construction contracts entered into even before CIPAA was brought into force.
Pt 3] Jack-In-Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd
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