When a payment dries up on a construction project, the contractor’s question is rarely “do I have a claim?” — the certificates usually answer that. The real question is “which forum gets me paid, and how fast?” In Malaysia there are three, and choosing between them is half the battle.
Statutory adjudication under CIPAA 2012
The Construction Industry Payment and Adjudication Act 2012 was designed for exactly this problem: cash-flow. It gives a party to a construction contract a fast, statutory route to a decision on a payment dispute, running to a strict timetable — broadly, an adjudicator must decide within 45 working days of the response, unless extended.
Its great virtues are speed and its “pay now, argue later” philosophy. An adjudication decision is binding and enforceable as a judgment (s.28) unless and until it is set aside (s.15), stayed (s.16), or finally overtaken by arbitration or court. For a subcontractor being starved of cash by a well-resourced main contractor, that is often decisive.
Its limits follow from its speed. The timetable is short and largely document-driven, so the case must be substantially ready before it starts — there is no time to build it as you go. And because the decision is interim, it does not end the dispute for good; the final account may still be fought elsewhere.
Arbitration
Most standard-form construction contracts in Malaysia — PAM, PWD, CIDB, FIDIC — provide for arbitration, often after practical completion. Arbitration suits the disputes adjudication was not built for: complex delay-and-disruption claims, contested final accounts, disputes turning on expert evidence about programme and productivity.
It offers a private, final determination by a tribunal that can be chosen for its construction expertise, with limited grounds of challenge under s.37 of the Arbitration Act 2005. The trade-off is time and cost: a substantial construction arbitration is a considerable undertaking, closer to a High Court trial than to an adjudication.
The courts
Litigation remains the right forum in defined situations: where there is no arbitration agreement; where urgent injunctive relief is needed; where enforcement or the setting-aside of an award or adjudication decision is in issue; and where a party wants a public, reasoned judgment on a point of principle. The court is also where an adjudication decision is enforced under s.28, and where a stay under s.16 is sought.
They work together, not against each other
The most common mistake is to treat these as three doors, only one of which may be opened. In practice they interlock. A contractor may adjudicate to get paid now, arbitrate to resolve the final account later, and go to court in between to enforce the adjudication decision or to restrain a call on a bond. Adjudicating does not waive the right to arbitrate; the interim decision simply holds the cash position while the larger dispute is worked out.
Choosing well means starting from the outcome you actually need — immediate cash, a final reckoning, an injunction, a precedent — and working backwards to the forum that delivers it. That is a decision worth making deliberately, and early, because each forum has a clock of its own.
This article is general information as at May 2026 and is not legal advice. The right forum depends on your contract and the facts of your dispute; take advice before serving or responding to any claim.
