CIPAA*

Join the Dots

* Construction Industry Payment And Adjudication Act

 by Tan Swee Im, International Arbitrator Member, 39 Essex Chambers, Kuala Lumpur

As of January 2021, just before MCO 2.0, there were about 500 active CIPAAA cases. This large number of cases was contributed partly by the inability of the Asian International Arbitration Centre (AIAC) to progress cases until the new Director of the AIAC had been appointed on 1 December 2020. However, it is also indicative of the prevalent payment disputes in the construction industry and the need for 3^rd party neutral intervention in order to facilitate payments.

The nature of CIPAA adjudication demands a greater emphasis on telling the story through the documents. If you will just put yourself in the shoes of the adjudicator, coming in cold to a project they know nothing about, to be met with conflicting versions of events and to have only 45 working days to deliver a decision, you will see the relevance of the story told through the documents.

HELP THE ADJUDICATOR TO HELP YOU!

MAZE – remember that the first time the adjudicator knows about your project, your contract, your issues and your case, is when they are appointed. They are completely new to the case, they have no knowledge about anything, as compared to you who has lived the project and the problems.

ROUTE THROUGH THE MAZE – therefore, you need to guide your adjudicator through the maze. There must a starting point, and there must be a clear path through the maze to get to the finish point – the desired outcome. You may think it is so straightforward, but it seldom is. Claimants often do not make the path clear, and when met with defences and counterclaims from the Respondent, the less clear becomes positively muddy. It is dangerous for the adjudicator to have to rely on guesswork. And although the adjudicator can ask for further explanations, that may well lead to new lines of arguments and most likely cause prolonged proceedings.

JOIN THE DOTS – to get the adjudicator through the maze, you need to guide the adjudicator through you case, step-by-step. Think back to the game we played as children – join the dots, from 1 to 2 to 3 and so on. So do not make assumptions. Do not make leaps of logic. Do not jump to conclusions. You may find it obviously clear, but you have lived the project and your problems. So, look at it objectively from the eyes of the adjudicator and test your argument by looking at it from the eyes of the other party. If you do not join the dots, you risk your adjudicator getting lost, or worse still, having to make guesses and putting the adjudication decision in danger of being susceptible to challenge.

TAKE YOUR ARGUMENTS TO CONCLUSION – make your arguments and ensure that you follow them through to conclusion. All too often we see arguments started, but then left hanging without conclusion. For example, if the argument is about under valuation of claims, then do argue convincingly supported by adequate evidence as to the basis of the under valuation. Follow through that argument to show specifically how it is under- valued and provide explanation with evidence of what the proper valuation ought to be. Take your argument to conclusion and show on the evidence how, the “correct” valuation is calculated. Instead, we see a lot of cries of “under valuation” and then … very little else.

SHOW ME THE NUMBERS – You need to show the numbers with absolute clarity. Commonly the argument will be for a sum is claimed – say RM7m. And the claim is based on an Interim Payment Certificate or quite often, a Final Account. But that is not the only amount claimed. Therefore, you need to show clearly how much is being claimed and for what. By way of simple example:

SHOW ME THE CALCULATION – often, the (say) RM7m claimed cannot be seen on the face of the supporting document. Almost always the number claimed is derived from a calculation. Therefore, since the number as claimed is not clear to be seen on the face of the document relied upon, the calculation to derive that number must be clearly shown, step-by-step. By way of simple example:

SHOW ME THE DOCUMENTS – with each step of that calculation supported by evidence. Take your adjudicator step-by-step and refer to the document, bundle number, page number, and identify the paragraph for each step of your calculation. Any step that cannot be seen on the face of an easily identified document, must be presumed to require guesswork. Therefore, make sure all your exhibits and bundles of documents are properly numbered and paginated.

GET ADVICE EARLY – because any wrong step will cost you in the long run. For example, a Claimant who has not been paid, slows down or stops work. The Respondent quickly initiates termination of the Claimant, alleging that the Claimant’s slowing down or stoppage of work is wrongful. The Claimant then replies to the termination and engages in a series of correspondence without having taken advice. The Claimant may admit to slowing down or stopping work even though the contract provisions do not allow him to do so, thereby unknowingly possibly admitting to a breach of contract. Such actions would have consequences on the Claimant’s position, be it good or bad.

JOIN THE DOTS, AND JOIN THEM WELL!