Is a contractor limited by the FIDIC Yellow Book (2nd Ed, 2017) to refer disputes only to the Dispute Avoidance Adjudication Board (“DAAB”)? Or does he have parallel rights under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) which he can invoke to initiate statutory adjudication?
The issue came up before the Court of Appeal recently in Aspen Glove Sdn Bhd v Tialoc Malaysia Sdn Bhd [2024] CLJU 615. The contract between the employer (Aspen Glove) and the contractor (Tialoc) contained the FIDIC Yellow Book which prescribed for disputes to be referred to contractual adjudication before the DAAB.
However, the contractor initiated CIPAA adjudication proceedings against the employer for a payment dispute. The employer applied to the High Court for a declaration that the reference to CIPAA adjudication is void and that the dispute should be referred to the DAAB instead. In response, the contractor sought to strike out the application, and succeeded.
The employer thereafter appealed to the Court of Appeal, and applied to stay the CIPAA adjudication proceedings pending the outcome of its appeal. The Court of Appeal refused the stay, the main reason being that parties cannot contract out of CIPAA as that would defeat its purpose of easing the cash flow of contractors by providing a mechanism for speedy dispute resolution. Accordingly, the contractor was entitled to resort to CIPAA even though the contract provided for contractual adjudication before the DAAB.
Interestingly, the Court of Appeal said the parties are not barred from proceeding with the DAAB procedure, but it does not take away the right of an unpaid contractor to invoke CIPAA (para 50). It would certainly be a difficult conundrum if parties had proceeded with both contractual and statutory adjudication at the same time, and ran the risk of two tribunals arriving at different findings on the same subject matter. Fortunately, good sense may have prevailed as it does not appear that the DAAB proceedings were initiated in parallel with the CIPAA adjudication.
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