INTRODUCTION TO THE LAW AND CIPAA

The law of Malaysia is mainly based on the common law legal system. This was a direct
result of the colonisation of Malaya, Sarawak, and North Borneo by Britain between the early
19th century to 1960s. The supreme law of the landthe Constitution of Malaysiasets out
the legal framework and rights of Malaysian citizens.
Federal laws enacted by the Parliament of Malaysia apply throughout the country. There are
also state laws enacted by the State Legislative Assemblies which applies in the particular
state. The constitution of Malaysia also provides for a unique dual justice systemthe
secular laws (criminal and civil) and syariah laws.
High Court / Mahkamah Persekutuan

Court Of Appeal / Mahkamah Rayuan

Federal Court / Mahkamah

Tinggi

Court of sabah and

Sarawak / Mahkamah Tinggi
Sabah Dan Sarawak

Sessions Court / Mahkamah

Seksyen

Magitrates Court /
Mahkamah Majistret

Syariah Court / Mahkamah Syariah

Figure 0 Malaysia legal system hierarchy

The Malaysian legal system hierarchy is mainly centred despite federal constitution of Malaysia. The
British Common Law has a great influence over this system and also the Islamic law but to a lesser
extent and no political interference is there in this system. In Malaysian legal system hierarchy there
are usually two kinds of trials, namely civil and criminal. The jurisdictions of courts in the matters of
civil or criminal cases are there in the Subordinate Courts Act 1948 and Courts of Judicature Act
1964.
The Article 121 of the Constitution presents two High Courts of equivalent jurisdiction, the Malaysian
High Court and the High Court in Sarawak and Sabah. Hence, this forms two different local
jurisdictions of courts for the Peninsular Malaysia and also for the East Malaysia.

The Superior Courts Malaysian legal system hierarchy comprises the Malaysian High
Court, the Court of Appeal, the Federal Court and the Court of Sarawak and Sabah.

High Court The High Court has general revisionary and supervisory jurisdiction
over all Subordinate Courts and hears appeals related to criminal and civil cases from
Subordinate Courts. The High Courts have rights to hear cases concerning all the

criminal matters.
Court of Appeal The Court of Appeal hears all the civil and criminal cases against

the judgments of High Court.

Federal Court All civil cases from Court of Appeal comes to the Federal Court only
after the Federal Court grants leave. The criminal cases are also heard by the Federal
Court from Court of Appeal only the issues which are heard by High Court in its

jurisdiction.
Court of Sabah and Sarawak The Sabah and Sarawak Court only hears appeals on
matters of their native customs and laws.

The Subordinate Courts In Malaysian legal system hierarchy, the Subordinate Courts
comprises the Sessions Courts, and the Magistrates Court.

Magistrates Court The Magistrates Courts hear all the civil issues in which the
claim is not more than RM25, 000-00. In criminal issues, the Courts have the power

to try all the offences in which the imprisonment term is not more than 10 years.
Sessions Court The Sessions Courts hear all the issues in which the claim crosses
RM25, 000-00 but not more than RM250, 000-00. It also hears criminal cases except
matters of death penalty.

Syariah Courts The Syariah Courts have jurisdiction over the issues of Muslims and
has an imprisonment term of not exceeding three years.
As we know, all the cases related to the law will be referred to and resolved in court.
Irrespective of the type of case that happens everything will be brought to court and settled
there. But in April 2014 in any case related to the construction will be completed by CIPAA.
The Construction Industry Payment and Adjudication Act (CIPAA) 2012 had come into
operation effective 15 April 2014. The Act was passed on 18 June 2012 and gazetted on 22
June 2012. The Ministry of Works had proposed the Construction Industry Payment and
Adjudication (Exemption) Order 2014 and the amended Construction Industry Payment and
Adjudication Regulations 2014.
Both had been approved by the Minister of Works Datuk Haji Fadilah bin Yusof and
operative 15 April 2014.
In this Act, unless the context otherwise requires,
adjudication decision mean the decision made by an adjudicator under subsection 12(2);
adjudication proceedings mean the process of adjudication under this Act;
adjudicator mean an individual appointed to adjudicate a dispute under this Act;
claimant mean an aggrieved party in a construction contract who initiates adjudication
proceeding;
construction consultancy contract means a contract to carry out consultancy services in
relation to construction work and includes planning and feasibility study, architectural work,
engineering, surveying, exterior and interior decoration, landscaping and project management
services;
construction work means the construction, extension, installation, repair, maintenance,
renewal, removal, renovation, alteration, dismantling, or demolition of:
a) Any building, erection, adifice, structure, wall, fence or chimney, whelter constructed
wholly or partly above or below ground level;
b) Any road, harbour works, railway, cableway, canal or aerodrome;
c) Any drainage, irrigation or river control work;
d) Any electrical, mechanical, water, gas, oil, petrochemical or telecommunication work;
or

e) Any bridge, viaduct, dam, reservoir, earthwork, pipeline, sewer, aqueduct, culvert,
drive, shaft, tunnel or reclamation work,
And include:
a) Any work which forms an integral part of, or are preparatory to or temporary for the
works described in paragraphs (a) to (e), including site clearance, soil investigation
and improvement, earth-moving, excavation, laying of foundation, site restoration and
landscaping; and
b) Procurement of construction material, equipment or workers, as necessarily required
for any works described in paragraphs (a) to (e);
construction work contract means a contract to carry out construction work;
contract administrator means an architect, engineer, superintending officer or other person
howsoever designated who administers a construction contract;
Government means the Federal Government or the State Government;
High Court mean High Court in Malaya or the High Court in Sabah and Sarawak, as the
case may require;
KLRCA means the Kuala Lumpur Regional Centre for Arbitration;
Minister means the Minister charged with the responsibility for works;
non-paying party means a party against whom a payment claim is made pursuant to a
construction contract;
principal means a party who has contracted with and is liable to make payment to another
party where that other party has in turn contracted with and is liable to make payment to a
further person in a chain of construction contracts;
respondent means the person on whom the notice of adjudication and adjudication claim
has been served;
site means the place where the construction work is affixed whether on-shore or off-shore;
unpaid party means a party who claims payment of a sum which has not been paid in whole
or in part under a construction contract;

working day means a calendar day but exclude weekends and public holidays applicable at
the State or Federal Territory where the site is located.
GENERAL
Many construction contracts allow the construction period to be extended where there are
delays that are not the contractor's fault. This is described as an extension of time (EoT).
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay
that could merit an extension of time, the contractor gives written notice to the contract
administrator identifying the relevant event that has caused the delay. If the contract
administrator accepts that the delay was caused by a relevant event, then they may grant an
extension of time and the completion date is adjusted.
Relevant events may include are variations, exceptionally adverse weather, civil commotion
or terrorism, failure to provide information, delay on the part of a nominated sub-contractor,
statutory undertakers work, delay in giving the contractor possession of the site, force
majeure (such as an epidemic or an 'act of god'), loss from a specified peril such as flood, the
supply of materials and goods by the client, strikes, changes in statutory requirements, delays
in receiving permissions that the contractor has taken reasonable steps to avoid and etc.
The contractor is required to prevent or mitigate the delay and any resulting loss, even where
the fault is not their own.
Assessing claims for an extension of time can be complicated and controversial. There may
be multiple or concurrent delays, some of which are the contractor's fault and some not.
There are many occasions where contractors contribute to delay themselves by their
performance during design periods, when producing drawings, mock ups and samples or in
inter-facing with sub-contractors. Crucial in assessing applications for extension of time is the
quality of the information provided and records available.
All claims should be judged against the progress of the works and not the programme and
must demonstrate the link between the breach (cause) and the delay. Supplemental and wrapup agreements previously agreed by both parties can weaken the contractors final
entitlement.
The contract administrator may review extensions of time after practical completion and
further adjust the completion date.

Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there
was no such mechanism and a delay occurred which was not the contractors fault, then the
contractor would no longer be required to complete the works by the completion date and
would only then have to complete the works in a 'reasonable' time. The client would lose any
right to liquidated damages.
Claims for extension of time can run alongside claims for loss and expense (relevant matters)
however, one need not necessarily lead to the other.
Extension of Time Notification and Application
Elements which are essential for the Contractor to clearly identify and present in his claim
are:
The Relevant Event
It is essential that the Contractor identifies the relevant event and the circumstances
which gave rise to delay which the Contractor considers entitles him to an extension
to the time for completion. This should have been stated in the Notice above but may
be expanded upon in the Contractors subsequent claim document.
Liability for the Relevant Event
Once the relevant event has been identified the Contractor now needs to attempt to
establish the liability for that relevant event. This is normally as simple as proving the
Contractor did not contribute towards the event which is stated in the Conditions of
Contract as being one which entitles the Contractor to an extension of time. Generally
where the responsibility rests with the Employer or it is a neutral event, such as force
majeure or exceptionally adverse climatic conditions, the Contractor can normally
establish the liability. However, this is dependent upon the terms and conditions of the
particular contract and as stated earlier the Contractor demonstrating he is responsible
for or contributed towards the event or its cause.
Contractual Entitlement
Typically, construction contracts contain provisions entitling the contractor to an
extension of time on the occurrence of a particular relevant event provided the
progress of the works or time for completion is delayed as a consequence. This is the
situation with PAM 2006.
The Contractor needs to clearly state under which clause or Sub-Clause under the
Contract he considers he is entitled to an extension to the time for completion and
further and prolongation or loss and expense costs. Normally the Contractor will have

highlighted these in his earlier notices and it is simply the case of repeating the same
within his detailed particulars. It is common but not essential for the Contractor to
reproduce the relevant Clauses and Sub-Clauses in the Claim document for ease of
reference, this will also make a very the claim document a very useful document
containing all the relevant information for review not only by the Architect but his
advisors and perhaps also the Employer. The more complete the document the easier
it will be for all to grasp the reasonableness of the same.
Compliance with Contract
Generally within extension of time clauses, the Contractor will be obligated to submit
notice(s) and detailed particulars within a specified time frame or risk losing all or
some of his entitlement and as noted above this is the case with PAM 2006 Condition
of Contract.
The submission of notices and detailed particulars is expressed to be a condition
precedent. The contractors failure to comply waives his entitlement to claim an
extension of time and owners liability cases. For this reason it is essential that the
Contractor establishes clearly within his detailed particulars that he has complied with
all the time constraints stated in the Contract and provided copies of all relevant
correspondence between the parties including confirmation of receipt proof.
Cause and Effect
Contractors when demonstrating the cause and effect of a relevant event need to list in
chronological order the pertinent exchanges of correspondence between the parties. In
addition they need to incorporate this into a story which should be prepared based on
the facts describing the effects of the relevant event upon the Works. This should
include details of the planned works which were directly and indirectly affected,
referring to the planned sequence, durations, and methods. Similarly it should include
the status of the works in relation to that planned at the time of the event and a
detailed description of the changes to that plan as a consequence of the relevant event.
Delay Analysis
A delay analysis to demonstrate the effect of the event on the contractors programme
should be included within the claim document.
There are a number of industry recognised delay analysis methods. Ultimately, the
choice of delay analysis method will be dependent upon such matters as level of
records available; the robustness of the baseline programme and any updates; time
available; degree of accuracy; and, level of proof required.
Statement of Claim
Every extension of time claim must contain a succinct statement of what the
contractor is claiming.

 Substantiation
The Contractor should extract and provide copies of documentary evidence
comprising letters, method statements, instructions, progress reports and photos,
minutes of meetings, programmes and schedules, statements of fact in support of the
assertions made within the claim submission. Where the Contractor claims for an
extension of the Time for Completion adopting these main elements it should provide
a sound basis for the Contractor in establishing his entitlement under the Conditions
of Contract.
BENEFIT TO PARTIES
Contractor
The benefit to the contractor of an Extension of Time is only to relieve the contractor
of liability for damages for delay (usually Liquidated Damages) for any period prior
to the extended contract completion date.
Employer or client
The benefit of Extension of Time to the employer is that it establishes a new contract
completion date, and prevents time for completion of the works becoming at large.
Time for completion of the Works is said to be at large when the Contractors obligation to
complete the Works within the specified time or certified extended time is lost. That is to say,
the Contractor is no longer bound by the contract provision that he has to complete the Works
by a certain date or extended date.
The obligation of the Contractor is then to complete the Works within what is called
reasonable time.
Time for completion of the Works can be said to be, or made, at large in the following five
situations:
a) No time for completion is fixed in the contract;
b) Improper administration or misapplication of the extension of time provision in the
contract;
c) Waiver of time requirements;
d) The Employers interference in the certification process;

e) When the extension of time provision does not confer power on the
Engineer/Architect/S.O. to extend the time for completion of the Works on the
occurrence of event or events which fall(s) within the obligation of the Employer.
The significant consequence of time for completion being at large is that the liquidated
damages clause in the contract becomes inoperative and the Employer cannot rely on this
liquidated damages clause to impose liquidated damages onto the Contractor. The other
significance when time for completion is at large is that the original completion date or the
contractually certified extended completion date no longer binds the Contractor. The
Contractors remaining obligation is to complete the Works within what is called reasonable
time the meaning of which we now turn.
TERMINOLOGY AND MEANING
Delay
Construction delays in residential and light construction are often the result of
miscommunication between contractors, subcontractors, and property owners. These types of
misunderstandings and unrealistic expectations are usually avoided through the use of
detailed critical path schedules, which specify the work, and timetable to be used, but most
importantly, the logical sequence of events which must occur for a project to be completed.
Delays in construction projects are frequently expensive, since there is usually a construction
loan involved which charges interest, management staff dedicated to the project whose costs
are time dependent, and ongoing inflation in wage and material prices.
However, in more complex projects, problems will arise that are not foreseen in the original
contract, and so other legal construction forms are subsequently used, such as change orders,
lien waivers, and addenda.
In construction projects, as well in other projects where a schedule is being used to plan
work, delays happen all the time. It is what is being delayed that determines if a project, or
some other deadline such as a milestone, will be completed late.
Before analyzing construction delays, a clear understanding of the general types of delays is
necessary. There are four basic ways to categorize delays:
Critical or Non-Critical
Excusable or Non-Excusable

 Concurrent or Non-Concurrent
Compensable or Non-Compensable
Before determining the impact of a delay on the project, one must determine whether the
delay is critical or non-critical. Additionally, all delays are either excusable or non-excusable.
Both excusable and non-excusable delays can be defined as either concurrent or nonconcurrent. Delays can be further broken down into compensable or non-compensable delays.
Economic historian Robert E. Wright argues that construction delays are caused by bid
gaming, change order artistry, asymmetric information, and post contractual market power.
Until those fundamental issues are confronted and resolved, many custom construction
projects will continue to come in over budget, past due, or below contract specifications, he
claims.
Concurrent delay
(1) Two or more delays that take place or overlap during the same period, either of
which occurring alone would have affected the ultimate completion date
(2) Concurrent delays occur when there are two or more independent causes of delay
during the same time period. The same time period from which concurrency is
measured, however, is not always literally within the exact period of time. For delays
to be considered concurrent, most courts do not require that the period of concurrent
delay precisely match. The period of concurrency of the delays can be related by
circumstances, even though the circumstances may not have occurred during exactly
the same time period.
(3) True concurrent delay is the occurrence of two or more delay events at the same
time, one an employer risk event, the other a contractor risk event and the effects of
which are felt at the same time. The term concurrent delay is often used to describe
the situation where two or more delay events arise at different times, but the effects of
them are felt (in whole or in part) at the same time
(4) Concurrent delay occurs when both the owner and contractor delay the project or
when either party delays the project during an excusable but non-compensable delay
(e.g., abnormal weather). The delays need not occur simultaneously but can be on two
parallel critical path chains

Bidgood, James K., Steven L. Reed, and James B. Taylor, Cutting the Knot on
Concurrent Delay, Construction. Briefings No. 2007-02, Thomson/West, February,
2008.

Reasonable time
The question of what duration of time is reasonable is one of fact, not law. It is a question of
fact taking into consideration all relevant factors and circumstances, objectively assessed.
Regrettably as it is, this is one of the elastic concepts for which there will be no fixed answer.
What constitute reasonable time has to be considered in relation to circumstances which
existed at the time the contract obligations are performed but excluding circumstances which
are under the control of the party performing those obligations, normally the Contractor in
our case. British Steel Corporation v. Cleveland Bridge & Engineering Co (1981) 24 BLR
94 per Robert Goff J (as Lord Goff then was) at p. 123.

Extension of time
Many construction contracts allow the construction period to be extended where there are
delays that are not the contractor's fault. This is described as an extension of time (EOT).
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay
that could merit an extension of time, the contractor gives written notice to the contract
administrator identifying the relevant event that has caused the delay. If the contract
administrator accepts that the delay was caused by a relevant event, then they may grant an
extension of time and the completion date is adjusted.
Relevant events may include:
a)
b)
c)
d)
e)
f)
g)
h)
i)

Variations.
Exceptionally adverse weather.
Civil commotion or terrorism.
Failure to provide information.
Delay on the part of a nominated sub-contractor.
Statutory undertakers work.
Delay in giving the contractor possession of the site.
Force majeure (such as an epidemic or an 'act of God').
Loss from a specified peril such as flood.

j)
k)
l)
m)

The supply of materials and goods by the client.

Strikes.
Changes in statutory requirements.
Delays in receiving permissions that the contractor has taken reasonable steps to
avoid.

The contractor is required to prevent or mitigate the delay and any resulting loss, even where
the fault is not their own.
Assessing claims for an extension of time can be complicated and controversial. There may
be multiple or concurrent delays, some of which are the contractor's fault and some not.
There are many occasions where contractors contribute to delay themselves by their
performance during design periods, when producing drawings, mock ups and samples or in
inter-facing with sub-contractors. Crucial in assessing applications for extension of time is the
quality of the information provided and records available.
All claims should be judged against the progress of the works and not the programme and
must demonstrate the link between the breach (cause) and the delay. Supplemental and wrapup agreements previously agreed by both parties can weaken the contractors final
entitlement.
The contract administrator may review extensions of time after practical completion and
further adjust the completion date.
Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there
was no such mechanism and a delay occurred which was not the contractors fault, then the
contractor would no longer be required to complete the works by the completion date and
would only then have to complete the works in a 'reasonable' time. The client would lose any
right to liquidated damages.
Claims for extension of time can run alongside claims for loss and expense (relevant matters)
however, one need not necessarily lead to the other.
Force majeure
Traditionally, force majeure clauses, in referring to circumstances beyond the control of the
parties, were intended to deal with unforseen acts of God or of governments and regulatory
authorities. More recently, force majeure clauses have been drafted to cover a wider range of
circumstances that might impact on the commercial interests of the parties to the contract. It

is now quite common for force majeure clauses to deal not only with impossibility of
performance, but also with questions of commercial impracticability. By itself, the term force
majeure has been construed to cover acts of God; war and strikes, even where the strike is
anticipated; embargoes, refusals to grant licences; and abnormal weather conditions.
.The underlying test in relation to most force majeure provisions is whether a particular event
was within the contemplation of the parties when they made the contract. The event must also
have been outside the control of the contracting party. Despite the current trend to expressly
provide for specific force majeure events, case law actually grants an extensive meaning to
the term force majeure when it occurs in commercial contracts. There are generally three
essential elements to force majeure:
It can occur with or without human intervention.
It cannot have reasonably been foreseen by the parties.
It was completely beyond the parties' control and they could not have prevented its
consequences.
For instance, Bailhache J. in Matsoukis v Priestman held that force majeure covered
dislocation of business owing to a universal coal strike and access to machinery, but not bad
weather, football matches or a funeral. In Lebeaupin v Crispin force majeure was held to
mean all circumstances beyond the will of man, and which it is not in his power to control.
Therefore, war, floods, epidemics and strikes are all cases of force majeure. There is an
important caveat to the above and that is parties cannot invoke a force majeure clause if they
are relying on their own acts or omissions. Additionally, the force majeure event must be a
legal or physical restraint and not merely an economic one.

References
1

https://simplymalaysia.wordpress.com/articles/delays/extension-of-time-notification-and-

application/
2 file:///C:/Users/USER/Desktop/20120622_746_BI_Act%20746%20BI.pdf
3 http://kontrak.water.gov.my/division/qs/documenstd/PWD%202010/Form_DB_1_2010.pdf
4

http://www.navigant.com/~/media/WWW/Site/Insights/Construction/Concurrent-Delay-

Construction.ashx