Adjudication in the Malaysian Construction Industry

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Student Soo Mei, Yap

Student No100071957

Proposed TopicAdjudication in the Malaysian Construction Industry

Background for the Research

Adjudication is one of the alternative dispute resolution procedures for resolving disputes, which giving of a non-binding opinion at the request of a party or parties to a dispute, and either party may refer to arbitration at a later stage. In the Latham Report (1994) recommended, inter alia, adjudication as the standard first instance dispute resolution technique in construction contracts.

In response, statutory-based adjudication was initially a phenomenon in the United Kingdom through the introduction of the Housing Grant and Construction Regeneration Act (HGCR Act) 1996 pursuant to Sir Michael Latham reports “Constructing the Team” in 1994 which reported the woes of the UK’s Construction Industry. It then spread to other countries. There are similar legislation has been introduced in the Australian states of Queensland, New South Wales, Victoria, and Western Australia, as well as some Asian countries. These include:

1. Building and Construction Industry Security of Payment Act 1999 amended in 2002 (New South Wales, Australia)

2. Building and Construction Industry of Payment Act 2002 (Victoria, Australia)

3. Construction Industry Payment Bill 2002 (Western Australia)

4. Construction Contracts (Security of Payment) Act 2004 (Northern Territory, Australia)

5. Construction Contracts Act 2002 (New Zealand)

6. Building and Construction Industry Security of Payment Act 2004 (Singapore)

Nevertheless, adjudication is still a potential concept which has not been explored to its fullest within Malaysia. In Malaysian construction industry, the common methods of settling construction disputes are through litigation and arbitration which are time-consuming and are often expensive.

Lord Denning in his judgment in the Court of Appeal in Dawnays Ltd v Minter Ltd has this to say about construction disputes: Cash flow is the lifeblood of the construction industry and One of the greatest threats to cash flow is the incidences of disputes, resolving then by litigation is frequently lengthy and expensive. Arbitration in the construction industry is often as bad or worse.

Gaitskell (2007) has shown that 80% of adjudication decisions are accepted in the UK which significantly reduced in litigation and arbitration in the construction industry in recent years.

Elliott (2005) states there is no system of dispute resolution is perfect and the successful reform of civil justice systems is notoriously difficult. Adjudication may not be the best resolution for disputes, but it is one of the solutions minimize time of disputes which may leads to further risk in the construction team.

Proposed Aims and Objectives of the Research

The aim of this proposed research is to examine the potential enactment of the proposed Construction Industry Payment and Adjudication Act (CIPAA) in the Malaysian Construction Industry. As well as enhance the confidence of adjudicator in the construction industry. In order to achieve the aims of this research, the following objectives have to be carried out:

i) To view the success of adjudication within the United Kingdom and Australia;

ii) To identity how adjudication has been used in the construction industry up to date;

iii) To analyze trends in adjudication determinations in Malaysia;

iv)To access awareness, knowledge and perception on local government in regards the application of adjudication in construction industry;

v) To recommend method of dispute resolution that best fit the Malaysian construction industry;

Proposed Conclusion of the Research


Objective One

i) To view the success of adjudication within the United Kingdom and Australia

Conclusions might be

1.Adjudication has been used in...
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