Statutory adjudication under CIPAA 2012, explained
A plain-English guide to the Construction Industry Payment and Adjudication Act 2012 — what it does, who can use it, and how a reference runs from payment claim to enforceable decision.
The idea behind the Act
Cash flow is the lifeblood of construction. When payment stops flowing down the chain, contractors and subcontractors who have already done the work carry the cost — sometimes to the point of insolvency. CIPAA’s answer is a rapid statutory process that produces a binding, enforceable decision on a payment dispute in a matter of months, not years.
The process, stage by stage
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01
Day 0
Payment claim
The unpaid party serves a payment claim under s.5.
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02
+10 working days
Payment response
The paying party admits or disputes; silence = deemed dispute.
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03
~15 working days
Notice & appointment
Notice of adjudication; adjudicator agreed or AIAC-appointed.
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04
+25 working days
Submissions
Adjudication claim, response and reply exchanged.
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05
~100 working days
Decision
Binding, enforceable decision on the payment dispute.
Questions we are asked
What is CIPAA and what problem does it solve?
The Construction Industry Payment and Adjudication Act 2012 came into force on 15 April 2014 to tackle a chronic problem in the industry: delayed and disputed payment down the contractual chain. It gives an unpaid party under a written construction contract the right to a fast, binding decision on payment from an independent adjudicator, without waiting years for arbitration or trial.
Who can use it?
Any party to a written construction contract carried out wholly or partly in Malaysia — main contractors, subcontractors, consultants and suppliers of construction work or services. There are limited exceptions, including certain natural-person residential contracts.
What is a payment claim?
It is the document that starts the process (s.5). It must state the amount claimed, the works or services it relates to, and the due date for payment. Getting it right matters, because defects in the claim can be challenged later.
What happens if the other side does not respond?
If a payment response is not served within 10 working days (s.6), the paying party is deemed to dispute the whole claim, and the unpaid party may proceed to a notice of adjudication. Silence does not make the problem go away for either side.
How long does it take?
From the payment claim to the adjudicator’s decision is usually around 100 working days. The adjudicator must decide within 45 working days of the response deadline, extendable by 30 more only if both parties agree.
Is the decision final?
It is binding and immediately enforceable, but it is temporarily binding — the dispute can still be finally decided by arbitration or the courts. In practice many decisions are never re-litigated because they reflect the merits.
Can I still adjudicate if there is an arbitration clause?
Yes. The statutory right to adjudicate a payment dispute exists alongside any arbitration or court agreement, and does not replace it.
What about “pay-when-paid” clauses?
Section 35 makes conditional-payment provisions — pay-when-paid and pay-if-paid — void for construction contracts. A payment obligation cannot be made conditional on the payer first being paid by someone else.
A payment claim just landed? The clock has already started.
Construction disputes run on deadlines — statutory and contractual. Tell us where you are and we will tell you, plainly, what your position is and what the next working days require. The first conversation is complimentary.