Statutory adjudication as a means for changing payment culture in the Malaysian construction industry

Loke, Mun Kit (2025) Statutory adjudication as a means for changing payment culture in the Malaysian construction industry. PhD thesis, UTAR.

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Abstract

Disputes and payment defaults are two prominent issues face by stakeholders in the Malaysian construction industry, yet resolving them through legal means is the last resort as arbitration and litigation are costly and time-consuming. Despite much research efforts and enactment of the Construction Industry Payment and Adjudication Act 2012 (CIPAA), disputes are still on the rising due to lack of in-depth understanding on root causes of disputes and statutory adjudication. This study aims to develop a practical approach model for effective application of CIPAA via questionnaire survey among registered adjudicators (N=280) from Asian International Arbitration Centre, and analysed by Statistical Packages for Social Science and Relative Importance Index, and verified via online interviews with six industry experts. The objectives are (a) to identify the common types of payment and contractual disputes; (b) to determine the right types of disputes suitable to resolve by CIPAA; (c) to examine the effectiveness of CIPAA 2012; and (d) to ascertain whether CIPAA adjudication is able to change existing mind-sets on payment default culture. The results identified twelve common payment disputes and eighteen contractual disputes. Only eight payment disputes: interim payment; payment certificate; withholding monies; final account; retention sum; variation order; certified value; professional fees; and one contractual dispute: imposition of liquidated damages are suitable to resolve by CIPAA. It verified that there is no statistically significant difference in the findings among diverse professions of the adjudicators. CIPAA concluded as an effective, cheap and speedy payment dispute resolution. The Act can influence the existing mind-sets to an ethical payment culture in the industry. This study contributes to existing knowledge in construction disputes, effective CIPAA application, and references for reforms. It serves as a practical guide for construction stakeholders in selecting CIPAA to resolve suitable disputes and achieve finality while mitigating legal challenges to adjudication decisions. Keywords: CIPAA; alternative dispute resolution; payment culture; statutory adjudication; construction Subject Area: K7690 Arbitration and award

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