Your Rights, Obligations, and Next Steps Under the Construction Industry Payment and Adjudication Act 2012

 Being served with a Payment Claim under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) can be stressful, especially when you believe the claim is unjustified. CIPAA is designed to ensure cash flow in the construction industry through a fast-track adjudication process. Once you receive a claim, strict statutory timelines apply, and inaction can be costly.

At Simrenjeet, Tay & Co, we act quickly to help contractors, subcontractors, consultants, and employers navigate this process strategically from day one.

 

WHAT YOU SHOULD DO IMMEDIATELY

Under Section 6 of CIPAA, you have 10 working days from the date of receiving a Payment Claim to issue a Payment Response. Failure to respond within time means you are deemed to have disputed the entire claim, and the claimant may immediately refer the dispute to adjudication.

Your Payment Response should:

• Clearly state the amount admitted or disputed;
• Set out the reasons for non-payment or partial payment; and
• Attach supporting documents such as certificates, correspondence or valuations.

TIP: Even a one-day delay may forfeit your opportunity to properly defend the claim.

 

HOW THE ADJUDICATION PROCESS UNFOLDS

If the dispute is not resolved, either party may initiate adjudication under Section 7 of CIPAA. The process is administered by the Asian International Arbitration Centre (“AIAC”) and generally takes place as follows:

 

• NOTICE OF ADJUDICATION: The Claimant serves a written notice outlining the dispute and the remedy sought.
• APPOINTMENT OF ADJUDICATOR: Both parties may agree on an adjudicator within 10 working days from the service of the notice of adjudication, if not, the AIAC Director appoints one within 5 days upon the request of either party in dispute.
• ADJUDICATION CLAIM, RESPONSE & REPLY: The claimant files an Adjudication Claim within 10 working days from the receipt of the adjudicator’s acceptance of appointment. The respondent must file an Adjudication Response within 10 working days from the date of receipt of the Adjudication Claim, followed by a Reply from the claimant within 5 working days from the date of receipt of the Adjudication Response.
• ADJUDICATOR’S ROLE: The adjudicator may call for meetings or limited hearings, order the production of documents, inspect the site, and draw on technical expertise. An adjudication decision must be delivered within 45 working days from the service of the Adjudication Response or Reply, whichever is later unless extended by agreement. If there is no Adjudication Response served by the respondent, the adjudicator must deliver the decision within 45 working days from the expiry of 10 working days from the date of service of the Adjudication Claim.

 

TIP: As a respondent always be aware whether the Adjudicator is conferred with  jurisdiction to adjudicate the matter and if he is not, do raise a jurisdictional objection.

 

UNDERSTANDING THE ADJUDICATION DECISION

Once issued, the Adjudication Decision is binding and enforceable, even if you disagree with it. Under Section 13 of CIPAA, the decision remains effective unless it is set aside by the High Court, superseded by arbitration or court, or settled by agreement between the parties.

If payment is not made, the successful party may:

• Enforce the decision as a court judgement (Section 28 CIPAA);
• Suspend work or reduce progress (Section 29 CIPAA); or
• Request direct payment from your principal (Section 30 CIPAA).

 

OPTIONS IF YOU LOSE THE ADJUDICATION

Even if the decision goes against you, you still have rights. You may:

• Apply to set aside the adjudication decision under section 15 of CIPAA on grounds such as fraud, bias, denial of natural justice and/or jurisdictional error;
• Apply for a stay under section 16 of CIPAA, especially if you have initiated an application for setting aside the adjudication decision, commenced arbitration or court proceedings on the same dispute.

 

COMMON MISTAKES TO AVOID

• Ignoring the claim notice – Silence is treated as a dispute, not a defence.
• Responding late – Strict timelines apply; extensions are rarely granted.
• Sending an incomplete response – Missing details or lack of evidence weakens your case.
• Not seeking legal advice early – Errors made at the payment response stage often cannot be corrected later.

 

HOW SIMRENJEET, TAY & CO CAN HELP

Our Construction Law and CIPAA Team advises and represents clients across Malaysia in:

• Reviewing the validity of payment claims and identifying procedural errors;
• Drafting effective Payment Responses and evidentiary support;
• Representing parties throughout the AIAC adjudication process;
• Preparing and arguing High Court applications to set aside, stay, or enforce adjudication decisions; and
• Providing strategic settlement guidance to protect your commercial interests.

 

With extensive experience in construction disputes and innovative approach to problem solving, we strive to safeguard your rights from the moment a claim is served.

 

ACT FAST – EVERY DAY COUNTS

CIPAA timelines are unforgiving. Missing a single step can result in a binding decision and enforcement against you. If you’ve just received a Payment Claim, seek advice immediately.

Contact our Construction & CIPAA Team – we will review your documents, outline your options, and guide you through the next steps to safeguard your position.