CHAMBERS

Global Practice Guides Introduction

MALAYSIA
JAPAN
CHILE
Construction
LAW AND PRACTICE:
Contributing Editor p.3
Law & Practice
Contributed by Baker –Winthrop
Malaysia
Lee Hishammuddin
Pillsbury
McKenzie
David Chile
Shaw
AllenPittman
& Gledhill
Streatfeild-James LLP

The ‘Law & Practice’

Contributed sections
Atkin provide easily accessible information on
Chambers
by
navigating the legal system when conducting business in the jurisdic-
Lee Hishammuddin
tion. Leading lawyersAllen
explain& Gledhill
local law and practice at key transactional
stages and for crucial aspects of doing business.

DOING BUSINESS IN CHILE:

MALAYSIA:
JAPAN: p.<OT>
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p.81
Chambers & Partners employ a large team of full-time researchers (over

2018
140) in their London office who interview thousands of clients each
year. This section is based on these interviews. The advice in this section
is based on the views of clients with in-depth international experience.
 MALAYSIA

LAW AND PRACTICE: p.3

Contributed by Lee Hishammuddin Allen & Gledhill

The ‘Law & Practice’ sections provide easily accessible information on

navigating the legal system when conducting business in the jurisdic-
tion. Leading lawyers explain local law and practice at key transactional
stages and for crucial aspects of doing business.
 Law and Practice MALAYSIA
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

Law and Practice

Contributed by Lee Hishammuddin Allen & Gledhill

CONTENTS
1. Standard Forms and Specialist Courts p.5 6. Delay and Disruption p.11
1.1 Standard Forms of Contract p.5 6.1 Delay p.11
1.2 Specialist Construction Courts p.5 6.2 Acceleration p.11
2. General Principles p.5 6.3 Global or Total Loss Claims p.12
2.1 Interpretation of Contracts p.5 7. Notice p.12
2.2 Pre-Contractual Documents and Post-Contract 7.1 Notices Required under the Contract p.12
Conduct p.6 7.2 Failure to Give Notice p.12
2.3 Restrictions on Parties’ Ability to Agree Terms p.6
8. Damages p.12
2.4 Limitation and Prescription p.6
8.1 Monetary Remedies for Breach of Contract p.12
3. Construction Contracts p.7 8.2 Assessment of Damages p.12
3.1 Pre-Contractual Duties p.7 8.3 Parties’ Ability to Exclude the Recovery of
3.2 Formation of the Contract p.7 Certain Losses p.12
3.3 Absence of a Formal Contract p.7 8.4 Interest p.13
3.4 Concluding by Conduct p.7 9. Termination p.13
3.5 Failure to Conclude p.7 9.1 Breach of Contract p.13
4. Contractual Terms p.8 9.2 Rights to Determine the Contract p.13
4.1 Implied Terms p.8 9.3 Termination for Non-Payment p.13
4.2 Entire Agreement Clauses p.8 9.4 Material Breach p.14
4.3 Exclusive Remedies Provisions p.9 10. Dispute Resolution p.14
4.4 Failure to Agree on a Price p.9 10.1 Litigation p.14
4.5 Determining Reasonable Value p.9 10.2 Arbitration p.14
4.6 Mandatory Payment Terms p.9 10.3 Adjudication p.15
4.7 Exceptions to the Application of Terms p.9 10.4 Expert Determination / Early Neutral
4.8 Restrictions on Ability of Parties’ to Agree Terms p.9 Evaluation p.16
4.9 Suspension of Performance on Grounds of No 10.5 Mediation p.16
Payment p.9
4.10 Certifiers p.9
4.11 Obligations of Certifier p.10
4.12 Failure to Act Impartially p.10
4.13 Parties’ Ability to Agree that Contents are
Conclusive p.10
4.14 Parties’ Ability to Agree on a Forum for Review p.10
5. Time for Performance p.10
5.1 In the Absence of Express Provision p.10
5.2 Extension of Time p.11
5.3 Liquidated and Ascertained Damages p.11

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MALAYSIA Law and Practice
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

Lee Hishammuddin Allen & Gledhill is a multi-practice tion practice group consists of lawyers practising in con-
law firm offering top-quality service as well as providing struction law, with strong industry experience and a track
personalised legal representation to both businesses and record of providing practical and commercially sound doc-
individuals. The firm is recognised for its ability to com- ument drafting, advice and analysis of construction claims
bine all areas of expertise and experience, giving its clients a and disputes.
competitive edge as well as optimum results. The Construc-

Authors
Dato’ Nitin Nadkarni heads the Energy, Darshendev Singh is a Partner with the
Infrastructure & Projects and Internation- Energy, Infrastructure & Projects and
al Arbitration Practice Group in Messrs International Arbitration Practice Group
Lee Hishammuddin Allen & Gledhill, in Messrs Lee Hishammuddin Allen &
Kuala Lumpur, Malaysia. He read law at Gledhill, Kuala Lumpur, Malaysia. His
the London School of Economics and was primary area of practice is commercial
called to both the English Bar and the Malaysian Bar. His dispute resolution, with a focus on disputes relating to
practice covers a wide range of international and domestic construction, engineering, oil & gas, and infrastructure
arbitration, commercial litigation and dispute resolution projects. He regularly sits as an adjudicator in disputes
encompassing all aspects of the construction, engineering, brought under the Construction Industry Payment and
energy, electricity sectors, as well as supply disputes in the Adjudication Act 2012 and represents clients in adjudica-
oil and gas sector; and disputes arising in the real estate tion, litigation and arbitration. He has also been involved
and transport sectors. He advises and acts in Malaysian in numerous international and domestic arbitrations
Court proceedings at all higher court levels and has a large conducted pursuant to various rules of arbitration. Some
arbitration practice primarily as counsel.He is a Fellow of of the construction-related matters that Darshendev has
the Chartered Institute of Arbitrators. He is also registered represented clients in include disputes arising out of
on the Kuala Lumpur Regional Centre for Arbitration building projects, power purchase agreements, fire
panels for arbitrators and mediators respectively, and the insurance policies, alleged defective timber products, the
reserve panel of arbitrators for the Singapore International failure of reclamation works, the construction of petro-
Arbitration Centre. He predominantly acts as counsel and chemical facilities in Sudan, the destruction of petroleum
arbitrator in both domestic and international disputes and shore tank facilities, the construction of a methanol
complex litigation. petrochemical plant, the construction of a coal-fired power
plant, the supply of telecommunication systems, the
construction of transmission lines, the construction of a
gas compression system for onshore facilities designed to
receive, compress, dehydrate and chill saturated gas from
various offshore fields, and the construction of a hydro
power plant.Besides being empanelled with the KLRCA’s
panel of adjudicators, Darshendev is also the Chairperson
of the Young Members Group of the Chartered Institute of
Arbitrators (Malaysia). Among others, he sits on the
Malaysian Bar Council’s Sub-Committees on Arbitration
and Construction Law and is a member of the Society of
Construction Law Malaysia and the KLRCA’s Young
Practitioners Group.

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 Law and Practice MALAYSIA
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

1. Standard Forms and Specialist Courts • claims by and against local authorities relating to statutory
obligations concerning development of land or construc-
1.1 Standard Forms of Contract tion of buildings;
There are various standard forms of construction contract • proceedings relating to arbitration which concerns any of
produced in Malaysia. The principal ones are those pro- the matters set out above;
duced by the (i) Institute of Engineers, Malaysia (“IEM”), • appeals from lower courts on matters set out in the first
(ii) Malaysian Institute of Architects (Pertubuhan Arkitek three items above.
Malaysia) (“PAM”), (iii) Construction Industry Develop-
ment Board (“CIDB”); and (iv) Malaysian Public Works
Department (“PWD”). 2. General Principles
For domestic works, it is not uncommon for one of the stand- 2.1 Interpretation of Contracts
ard forms produced by the IEM, PAM or PWD to be adopted Some of the general principles applied by the courts when
by the parties, depending on the nature of the works. interpreting clauses in a contract are:

PWD standard forms are commonly used for projects where • The intention of the parties to the agreement can and must
the employer is a Federal Government, State Government or be gathered from within the agreement;
Government-Linked Company. • However, if parties, by their subsequent conduct, give a
particular meaning or interpretation to a contract, they
The PAM standard forms are usually used for private build- may be stopped from resiling from such an agreed mean-
ing works. ing;
• In interpreting clauses, due regard must be given to the
The IEM standard forms are usually used for engineering contract as a whole in order to ascertain the true mean-
projects. ing and intention of the parties as expressed by the several
clauses in the agreement;
On the other hand, is not unusual to have parties adopting • Efforts should be made to give effect to every clause in the
the FIDIC standard forms for international work. agreement and not to reject a clause unless it is manifestly
inconsistent with or contradictory to the rest of the agree-
1.2 Specialist Construction Courts ment;
There are two specialist construction courts in Malaysia. • The words and expressions of each clause must be so in-
One is located in Kuala Lumpur (the capital of Malaysia) terpreted as to bring them into harmony with the other
and the other is located in Selangor (a state neighbouring provisions in the agreement;
Kuala Lumpur). These courts commenced operation on 1 • Where there is an inconsistency between different provi-
April 2013 and hear disputes that are based on or connected sions of an agreement, the specific provisions may override
to the following construction-related matters: general provisions;
• The contract is to be construed in accordance with the
• building, engineering or other construction-related dis- reasonable expectations of sensible businesspeople or in
putes including: such a way that a reasonable person versed in commercial
matters would construe them;
(a) claims pursuant to the Construction Industry Pay-
• In interpreting a contract, the courts will have regard to the
ment & Adjudication Act 2012 (“CIPAA”) save for
substance of the agreement or the factual matrix forming
judicial reviews;
the background of the transaction between the parties to
(b) claims relating to performance, guarantees or insur-
determine the true nature or object of the agreement or
ance bonds;
transaction. However, the courts will not look at the nego-
(c) claims relating to the quality of the goods sold or
tiations leading up to the contract. This generally means
rented, and works carried out, materials supplied or
that the subjective intent of parties will be disregarded in
services rendered;
favour of an objective evaluation of the parties’ intent or
(d) claims connected to the environment (eg environ-
purpose in entering into the bargain in the first place;
mental pollution)
• Terms can be implied, when it is necessary, so as to give
them reasonable business efficacy, where a construction
• claims by and against engineers, architects, surveyors, ac- tending to that result is admissible in the language of the
countants, consultants or other special advisers relating to contract, in preference to a result which would or might
services provided; prove unworkable. The implied term must go without say-
ing, it must be ‘necessary to give business efficacy to the
contract’;

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MALAYSIA Law and Practice
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

• Malaysian law does not recognise a general duty to act in relation to construction disputes, is six years from the date
good faith when negotiating the terms of a contract. It is on which the cause of the action accrued: Section 6 (1) Limi-
an open question whether there is an implied duty to act in tation Act 1953.
good faith during the performance of the contract.
Where the action is based on fraud, the right of action is
2.2 Pre-Contractual Documents and Post-Contract concealed by fraud or the action is for relief from the con-
Conduct sequences of a mistake, the period of limitation shall only
As mentioned in Section 2.1 Interpretation of Contracts begin to run from the date on which the plaintiff discovers,
above, the intention of the parties can and must be gathered or could with reasonable diligence have discovered, the fraud
from within the agreement. Generally, the conduct of the or mistake: Section 29 Limitation Act 1953.
parties subsequent to the execution of the contract is not a
relevant aid in interpretation. It is important to note that the Limitation Act 1953 does not
confer a right of action but has been enacted for the purpose
However, the parties by their subsequent conduct may have of restricting the period within which such a right may be
acted on a common understanding as to the meaning of asserted.
the contract and, accordingly, may be stopped from resiling
from such an agreed meaning. Except for the following agreements, pursuant to Section 29
of the Contracts Act 1950, an agreement that limits the time
Although the courts will have regard to the factual matrix, within which a party is able to enforce their rights or restricts
which is everything that was known to the parties at the time absolutely the ability to enforce their rights by the usual legal
they entered into the contract, the court, in interpreting a proceedings in ordinary tribunals, is void:
contract, will not look at evidence showing the subjective
intention of the parties including the negotiations or pre- • to refer a dispute to arbitration;
contractual documents leading up to the contract. • that only the amount awarded in the arbitration shall be
recoverable in respect of the dispute so referred;
2.3 Restrictions on Parties’ Ability to Agree Terms • to refer to arbitration any question between the parties
Pursuant to section 11 of the Contracts Act 1950, any person which has already arisen or invoke any law as to references
is competent to agree a contract so long as they are of the age to arbitration;
of majority according to the law to which they are subject, • between the Government and any person with respect to
of sound mind and not disqualified from contracting by any an award of a scholarship by the Government wherein it is
law to which they are subject. provided that the discretion exercised by the Government
under that contract shall be final and conclusive and shall
Persons are said to be of sound mind for the purpose of not be questioned by any court.
making a contract if, at the time when they make it, they
are capable of understanding it and of forming a rational Accordingly, an agreement between the parties to limit the
judgment as to its effect on their interests: Section 12 of the period within which a party is entitled to enforce its rights
Contracts Act 1950. to bring an action in court is void.

Malaysia does not have any statute dealing with unfair con- However, the situation differs when it comes to abridging
tract terms. However, a contract is voidable if the consent to or enlarging the period within which a party is entitled to
an agreement is caused by coercion, fraud, misrepresenta- enforce its rights to bring an action in arbitration. Such an
tion or undue influence. A contract is said to be induced agreement has been found to be valid and does not contra-
by ‘undue influence’ where the relations subsisting between vene Section 29 of the Contracts Act 1950.
the parties are such that one of the parties is in a position
to dominate the will of the other and uses that position to As such, the parties are free to agree that they would be
obtain an unfair advantage over the other. deemed to have waived any rights to refer any dispute to
arbitration if such reference is not made within a prescribed
On the other hand, a contract is void if both parties to an period of time. In such circumstances, the dispute must be
agreement were under a misapprehension as to a matter of referred to arbitration within that specified period unless
fact essential to the agreement, but not voidable if it was extended by the High Court pursuant to section 45 of the
caused by a mistake as to any law in force in Malaysia. Arbitration Act 2005 (“AA”).

2.4 Limitation and Prescription The High Court has the power to extend the time for com-
Generally, the time period within which one is entitled to mencing arbitration proceedings if it is of the opinion that,
bring an action founded on breach of contract or tort, in in the circumstances of the case, undue hardship would

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 Law and Practice MALAYSIA
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

otherwise be caused. Unless excluded by the parties, Sec- have to be borne by the contractor in the event that the con-
tion 45 applies to a domestic arbitration. Unless agreed to tract is not awarded to them. In fact, it is not unusual for
by the parties, Section 45 does not apply to an international provisions to be made in the invitation to bid or tender that
arbitration. any cost and expenses incurred for any tender submissions
are at the sole expense of the contractor.
Pursuant to Section 6 (1) Limitation Act 1953, the time with-
in which one is entitled to bring an action based on contract 3.2 Formation of the Contract
or tort shall begin to run from the date on which the cause Generally, there is no particular formal requirement in the
of action accrued. formation of a construction contract which differs from the
formation of a normal contract in most common law juris-
However, among others, where the action is based on fraud dictions.
or the right of action is concealed by fraud or the action is
for relief from the consequences of a mistake, the period of 3.3 Absence of a Formal Contract
limitation shall not begin to run until the plaintiff has, or The mere fact that a formal contract is not concluded does
could with reasonable diligence have, discovered the fraud not necessarily mean that there is no binding contract be-
or mistake. tween the parties. The courts would look, among other
things, into contemporaneous evidence, including the con-
A ‘cause of action’ accrues when a right to sue arises. In an duct of the parties, to determine the existence of any con-
action based on contract, the cause of action normally ac- tract.
crues from the date of the breach.
Generally, an agreement expressing interest to enter into a
On the other hand, in an action based on tort, generally the contract does not entitle a party to the agreement to insist
cause of action accrues when the damage is suffered. How- that a contract ought to be entered into. For example, a letter
ever, the law is not settled whether a cause of action accrues of intent which usually expresses the employer’s interest to
on the date on which the damage: enter into a contract with the contractor at a future date does
not, by itself, provide a right to the contractor to insist that
• actually occurs; or a contract ought to be awarded to the contractor. However,
• was reasonably discoverable. this does not necessarily mean that all the terms contained
in a letter of intent have no legal effect.
There is no specific provision in the Limitation Act 1953
dealing with the discovery of latent defects subsequent to In some cases, the letter of intent may authorise the con-
the expiry of the limitation period. tractor to mobilise and/or order or purchase materials. This
may create a separate but parallel contractual relationship
between the parties. At the end of the day, it all depends on
3. Construction Contracts the facts of each case.

3.1 Pre-Contractual Duties 3.4 Concluding by Conduct

As mentioned in Section 2.1 Interpretation of Contracts It is possible for a construction contract to be concluded
above, the law does not recognise a duty to act in good faith by conduct. In determining whether a contract has been
during the negotiation of the terms of the contract. Having concluded by conduct, the courts would have to look into
said that, a contract may be challenged if it can be shown contemporaneous evidence, including the conduct of the
that the consent of the innocent party in entering into the parties, to determine whether a contract has been concluded.
contract was obtained by coercion, undue influence, fraud,
misrepresentation or mistake. For example, the courts may find that there is a concluded
contract where a contractor commences construction work
Unless otherwise agreed, one who has carried out works in and the employer, having knowledge of the performance,
anticipation of being awarded a contract and to the extent does not at all, or within reasonable time, object to the
that the other party has received benefit of the works, may works being carried out. A contract may also be concluded
be entitled to claim the expenses incurred in relation to the by conduct where the contractor accepts payment from the
works if they were not intended to be carried out gratui- employer for works that are to be carried out.
tously.
3.5 Failure to Conclude
Usually, the costs of preparing the tender are factored into Whether one is entitled to payment for construction work
the overall contract price. Many contractors prepare tenders performed in anticipation of a construction contract which
on the expectation that the costs of the preparation would

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MALAYSIA Law and Practice
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

is not concluded would depend on the circumstances in Where CIPAA applies and there is an absence of terms of
which the construction works were carried out. payment in the construction contract, the default provisions
as set out in Section 36 of CIPAA relating to value of progress
Generally, one is entitled to be paid for such construction payments, time for payment etc shall apply.
works if they were:
CIPAA only applies to construction contracts (as defined
• performed at the request of the other; or under CIPAA) made in writing relating to construction
• lawfully carried out not intending to do so gratuitously and works carried out wholly or partly within the territory of
the other person had enjoyed the benefit thereof. Malaysia (including a construction contract entered into by
the Federal or State Government) but excludes construction
contracts entered into by a natural person for any construc-
4. Contractual Terms tion work in respect of any building which is less than four
storeys high and which is wholly intended for his occupation
4.1 Implied Terms or those construction contracts which are exempted pursu-
As mentioned in Section 2.1 Interpretation of Contracts ant to Section 40 of the CIPAA.
above, terms can be implied, when it is necessary, so as to
give them reasonable business efficacy, particularly where Currently, Government construction contracts for any of the
a construction tending to that result is admissible on the following construction works are exempted from all provi-
language of the article, in preference to a result which would sions of CIPAA:
or might prove unworkable.
• that is carried out urgently and without delay due to natural
The implied term must go without saying, it must be ‘neces- disaster, flood, landslide, ground subsidence, fire and other
sary to give business efficacy to the contract’. Terms are usu- emergency and unforeseen circumstances;
ally implied among other things, based on custom and usage • that relates to national security or security-related facili-
and the previous conduct or course of dealings of the parties. ties which includes the construction of military and police
facilities, military bases and camps, prisons and detention
In construction contracts, it is not uncommon for among camps, power plants and water treatment plants.
other things, for the following terms to be implied:
4.2 Entire Agreement Clauses
• The employer will not interfere with or obstruct an archi- Entire agreement clauses are also commonly found in con-
tect or engineer in discharging their duties as a certifier; struction contracts in Malaysia and the courts would gen-
• The employer has the obligation to appoint a new architect erally uphold such clauses. The purpose of an entire agree-
or engineer in the event of death; ment clause is to exclude evidence of a collateral contract,
• The employer has the obligation to not interfere with the misrepresentation, or otherwise vary or alter the terms of
works of the contractor or prevent the contractor from per- the written contract.
forming their obligation under the contract;
• Although the site may belong to the employer, during the These clauses are inserted by parties to ensure that, whatever
existence of the contract the employer ought not to enter may have been said during the course of earlier negotiations
the site, possession of which has been given to the contrac- and discussions, in the end the only agreement between the
tor, without the permission of the contractor, who ought parties is what is documented in the contract. The purpose
not to unreasonably withhold such permission; is to prevent one party from later alleging that:
• The materials and workmanship delivered by the contrac-
tor shall be of satisfactory quality; • the written document is not complete or exhaustive of the
• The completed works would be fit for the intended pur- agreement between the parties;
pose; • that there was some undocumented collateral agreement;
• The works would be carried out to a satisfactory quality; or
• The contractor would exercise reasonable skill, care and • that the agreement does not truly reflect what was agreed
diligence in performing their duties and obligations and between the parties.
in ensuring that the works are in compliance with the con-
tract; In short, these clauses are agreed to by the parties to ensure
• The works would be carried out by workers with reason- certainty in commercial affairs and to prevent or minimise
able and adequate capability, experience, knowledge and arguments, based on matters not expressly captured in a
understanding required to execute and complete the works. contract, being raised as an excuse for not complying with
documented contractual obligations.

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 Law and Practice MALAYSIA
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

4.3 Exclusive Remedies Provisions tural work, engineering, surveying, exterior and interior
It is not uncommon for construction contracts in Malaysia decoration, landscaping and project management services.
to contain clauses to the effect that in the event of a breach,
one or more of the parties are only entitled to certain rem- A ‘construction work contract’ is defined as a contract to
edies as specified in the contract. carry out construction work. “Construction work” is defined
as construction, extension, installation, repair, maintenance,
Whether or not the courts would uphold such a clause would renewal, removal, renovation, alteration, dismantling or
depend on the construction of the contractual terms. Even demolition of:
if such a clause is upheld, it is likely that the courts would
take the approach that the innocent party is not entitled to • Any building, erection, edifice, structure, wall, fence or
the remedy as of right and would still need to meet the legal chimney, whether constructed wholly or partly above or
thresholds for such remedies to be granted. below ground level;
• Any road, harbour works, railway, cableway, canal or aero-
4.4 Failure to Agree on a Price drome;
Where the parties have failed to agree on a price, in circum- • Any drainage, irrigation or river control work;
stances in which it is clear that the works were not performed • Any electrical, mechanical, water, gas, oil, petrochemical
gratuitously, the party which has benefited from the works or telecommunication work; or
is bound to make compensation to the former in respect • Any bridge, viaduct, dam, reservoir, earthworks, pipeline,
of, or to restore, the thing so done or delivered. This right sewer, aqueduct, culvert, drive, shaft, tunnel or reclama-
arises under Section 71 Contracts Act 1950. The compensa- tion work.
tion would generally be assessed on the basis of the reason-
able value of the work. 4.7 Exceptions to the Application of Terms
As mentioned in Sections 4.1 Implied Terms and 4.6 Man-
4.5 Determining Reasonable Value datory Payment Terms above, in the absence of terms of
Generally, reasonable value of the works that have been car- payment in a construction contract and where CIPAA ap-
ried out would be determined not based on the contract plies, the default provisions as set out in Section 36 of CIPAA
price but on a quantum meruit basis having regard to the relating to, among other things, value of progress payments,
actual value of the works that have been carried out. In other time for payments, etc would apply.
words, the plaintiff would not receive contractual damages
but restitution for the work done. 4.8 Restrictions on Ability of Parties’ to Agree
Terms
4.6 Mandatory Payment Terms Generally, there are no restrictions on the ability of the par-
Under common law, there is no particular payment term ties to agree terms relating to payment in a construction
which a construction contract must either include or in re- contract. However, by the coming into force of CIPAA, ‘pay-
spect of which it must make equivalent provision. However, when-paid’ and ‘pay-if-paid’ clauses contained in construc-
in the absence of terms of payment in a construction con- tion contracts to which CIPAA applies are statutorily void
tract to which CIPAA applies, the default provisions as set pursuant to Section 35 of CIPAA. Unless exempted, most
out in Section 36 of CIPAA relating to, among other things, written construction contracts come within the purview of
the value of progress payments, time for payments, etc would CIPAA. CIPAA came into force on 15 April 2014 and applies
apply. retrospectively.

As mentioned Section 4.1 Implied Terms above, CIPAA 4.9 Suspension of Performance on Grounds of No
does not apply to all construction contracts. Payment
Under Malaysian law, a contractor may not suspend works
Further, there is no one ‘cast in stone’ definition of a con- unless the right to do so is provided under the contract or,
struction contract in Malaysia. However, for guidance one where CIPAA applies, the adjudicated amount is not paid in
may refer to the definition of ‘construction contract’ as pro- full by the non-paying party.
vided in CIPAA. CIPAA defines a construction contract as a
‘construction work contract’ or a ‘construction consultancy 4.10 Certifiers
contract’. A certifier (be it an architect, engineer, superintending of-
ficer etc) is employed by the employer for the purpose of,
A ‘construction consultancy contract’ is defined as a contract among other things, economically and efficiently securing
to carry out consultancy services in relation to construction the completion of the works. In discharging their obliga-
work and includes planning and feasibility study, architec- tions, the certifier would usually also be required to certify

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MALAYSIA Law and Practice
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

work done, value of the work done, requests for extensions construction contracts in Malaysia typically stipulate that
of time to complete the works, etc. interim certificates are not conclusive.

Certifiers are for all intents and purposes an agent of the em- 4.14 Parties’ Ability to Agree on a Forum for
ployer and are paid by the employer. However, when it comes Review
to certifications the courts have held that there is an implied It is possible for the parties to agree that the opening up,
obligation on the part of the certifier to act independently in review and/or revision of a certificate is only to be performed
arriving at decisions fairly, holding a balance between their in a particular forum (eg arbitration) and the courts will
client and the contractor. uphold such an agreement.

4.11 Obligations of Certifier The rationale behind upholding such an agreement is that
In practice, it is not uncommon for a certifier to consult that ‘court’s jurisdiction does not include a right to modify
the employer and/or the contractor prior to arriving at any contractual rights’: Chase Perdana Berhad v Pekeliling Tri-
determination. However, despite consulting either the em- angle Sdn Bhd & Ors (2001) MLJU 389 (High Court) &
ployer or the contractor, there is an implied obligation on Pekeliling Triangle Sdn Bhd & Anor v Chase Perdana Bhd
the part of the certifier to arrive at a determination fairly, (2003) 1 MLJ 130 (Court of Appeal).
holding the balance between their client and the contractor.
However, where CIPAA applies, the adjudicator has the
This implied obligation exits even in a situation where a cer- right to review and/or revise any certificates relating to the
tifier is to determine a claim by a contractor in relation to dispute referred to adjudication irrespective of whether the
matters where the certifier may have an interest in the result construction contract contains any provision to the effect
of the determination or assessment. Of course, a contractor that the certificate is only to be revised and/or revised in a
has the option of challenging the decision of the certifier. particular forum. It appears that where CIPAA applies, the
parties cannot contract out of CIPAA.
4.12 Failure to Act Impartially
The certifier has no contractual relationship with the con-
tractor and is an agent of the employer. In the event that the 5. Time for Performance
certifier fails to act impartially, fairly and/or honestly in dis-
charging their duties as the certifier, generally the contractor 5.1 In the Absence of Express Provision
may challenge the certification by bringing an action against In the absence of any express provision in the contract about
the employer or by any other means stipulated in the con- the time for performance, the relevant obligation ought to be
tract. Where CIPAA applies, the adjudicator in determining performed within a reasonable time. Such a term would gen-
a payment dispute has the power to, among other things, erally be implied as it represents the unexpressed intention
review and revise certificates relevant to the dispute. of the parties or is necessary to give business efficacy to the
contract. This common law position is codified in Section
4.13 Parties’ Ability to Agree that Contents are 47 of the Contracts Act 1950. What is meant by ‘reasonable
Conclusive time’ is peculiar to each contract.
The parties are free to agree that once a certificate has been
issued its contents are conclusive and may not be subse- If a party does not perform such an obligation within ‘rea-
quently reviewed. However, it is unlikely that a party would sonable time’ and the obligation is a fundamental obliga-
agree to such a clause without there also being a stipulation tion under the contract, the innocent party may be entitled
to the effect that an opportunity would be given to either to determine the contract on the ground that the contract
party to, within a specified period, raise any concerns in rela- breaker has repudiated the contract.
tion to the contents and/or issuance of the certificate.
Depending on the facts of each matter, it may be necessary
Failure to raise any issues within the specified period or any for the innocent party to provide the contract breaker with a
extended period may prevent a party from later challeng- notice to complete which would, in turn, form a firm foun-
ing the certificate. The courts would normally uphold such dation for the inference of repudiation. The significance of
‘conclusive’ clauses unless it can be shown that the certificate the notice is twofold: “primarily, it fixes day when, if the
was, among other things, issued as a result of fraud, misrep- default is not remedied, the party in default will be held to
resentation or bad faith. have repudiated the promise; and, secondarily, it will show
that, for equity’s purposes, it is fair for the innocent party to
However, it is not common for parties in construction con- exercise the right of termination”: S&M Jewellery Trading
tracts in Malaysia to agree to stipulate such ‘conclusive’ effect Sdn Bhd & Ors v Fui Lian-Kwong Hing Sdn Bhd [2015]
clauses in relation to interim certificates. On the contrary,

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MLJU 518 (Federal Court); Sime Hok Sdn Bhd v Soh Poh limit of the liquidated damages clause. Compensation can-
Sheng [2013] 2 MLJ 149 (Federal Court).. not be awarded where no loss or damage has been suffered.
Otherwise it would be a punishment or unjust enrichment,
5.2 Extension of Time rather than compensation.
If a contract does not provide for extension of time in a situ-
ation where the delay is caused by or contributed to by the The second exception is contracts prescribed or regulated
employer, the relevant obligation may only need to be per- by statute, which provide for liquidated damages to be paid.
formed within a reasonable time. What is meant by reason- For example, housing developers are required, by law, to use
able time is peculiar to the facts of each matter. contracts prescribed by regulations for the sale of houses
to the public. These contracts contain liquidated damages
5.3 Liquidated and Ascertained Damages clauses for delay. As these contracts are prescribed by law,
The employer is entitled, during the course of the contract, the house buyers will be entitled to the liquidated damages
to deduct the sums set out in the liquidated damages clause so stipulated without proof of loss and as of right.
from payments due to the contractor. If subsequently chal-
lenged by the contractor during a dispute resolution process
(eg arbitration), the owner will have to justify the deduction. 6. Delay and Disruption
In most common law countries, in order to justify such a 6.1 Delay
deduction, the employer will only have to prove that the In the event of there being a concurrent delay caused by
liquidated damages clause is a genuine pre-estimate of the both a contractor’s risk event and an employer’s risk event
damages suffered by the employer as a result of the contrac- and the construction contract makes no express provisions
tor’s delay. for resolving the conflict, the court ought to determine the
dominant cause of the delay. If the dominant cause of the
The employer will only be required to prove the actual loss delay is due to the fault of the employer, the contractor ought
that it suffered if the contractor can show that the liquidated to be entitled to be given more time. Whether the contractor
damages clause is a penalty, and not a genuine pre-estimate would, in such a situation, also be entitled to costs would
of the damages caused by the delay. depend on the terms of the contract

In Malaysia, liquidated damages clauses are generally treated 6.2 Acceleration

in the same way as penalty clauses under English law. Pursu- Unless the contract expressly allows the employer to issue an
ant to Section 75 Contracts Act 1950, the employer is only instruction to accelerate works or where the parties mutually
entitled to damages if it can prove to have actually suffered agree to the issuance of such instructions, the contractor
as a consequence of the delay by the contractor, but up to a may not be obliged to comply with such instructions for ac-
limit of the sums set out in the liquidated damages clause. celeration. It is an open question whether or not a contractor
would be entitled to seek compensation in a constructive ac-
There are two main exceptions to the general rule that, not- celeration situation ie where a contractor accelerates works
withstanding a liquidated damages clause, the owner is only on its own initiative in the following circumstances to avoid
entitled to damages for the actual loss that it can prove it facing demands for liquidated damages:
suffered as a result of the delay.
• pending certification of an extension of time application;
The first exception is a small category of cases in which: and/or
• subsequent to the rejection of an extension of time applica-
• One has clearly suffered some real damage by reason of tion; or certification of a shorter time than the time sought
the delay; and in the extension of time application.
• However, it is not possible to assess the damage actually
suffered because there is no known measure that would Non-binding guidance can be sought from item 1.18.5 of the
allow the court to accurately calculate it. Society of Construction Law Delay and Disruption Protocol:
October 2002, which suggests that ‘where a contractor accel-
In these limited circumstances, the court can award damages erates on its own accord, it is not entitled to compensation.
to compensate the employer for its loss, even without proof If it accelerates as a result of not receiving an EOT that it
of the actual damage suffered. Prima facie, the court would considers is due to it, it is not recommended that a claim for
assume that a liquidated damages clause is a reasonable so-called constructive acceleration be made. Instead, prior
sum, since it was agreed to by both parties. If, however, the to any acceleration measures, steps should be taken by either
contractor can show that the liquidated damages is in fact a party to have the dispute or difference about entitlement to
penalty, the court will only award a reasonable sum, up to the

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EOT resolved in accordance with the dispute resolution pro- Among other things, specific performance will not be grant-
cedures applicable to the contract.’ ed where compensation in money is an adequate relief or
for a contract which runs into such minutes or numerous
6.3 Global or Total Loss Claims details, or which is so dependent on the personal qualifica-
‘Global’ or ‘total’ loss claim are terms used to describe a claim tions or volition of the parties, or otherwise from its nature
made by a contractor which is based on various breaches on is such, that the court cannot enforce specific performance
the part of the employer without being able to identify which of its material terms: Section 20 (1) Specific Relief Act 1950.
particular breach has caused which particular loss. In such a
case the contractor would usually claim its loss and expense In the circumstances, it is not often that one would be able
in a single or global claim. Malaysian law ought not to differ, to obtain an order for specific performance of a construc-
or substantially differ, from the common law principles that tion contract.
are applicable to the rule on proving damages.
The objective of an award of damages in a situation of a
breach of contract is to place the plaintiff so far as money
7. Notice can do it in as good a position as they would have been in
had the defendant performed the contract. However, the in-
7.1 Notices Required under the Contract nocent party may in some cases elect to be paid for wasted
There is no particular limitation or control which applies expenses as opposed to loss of profit.
to a provision in the contract which makes it a condition
precedent for notice to be given of the circumstances giving On the other hand, in tort, the object of awarding damages is
rise to the claim. The courts, generally, take the approach to try to place the injured party in the same position as they
that they will not, in a properly entered into contract, re- would have been in if the wrong for which they are being
write the contracts irrespective of whether the terms of the compensated for had not been committed.
contract are unfavourable or unduly onerous to one of the
contracting parties. In seeking to establish loss and claim damages, one is not
entitled to any remote or indirect loss or damages.
7.2 Failure to Give Notice
Generally, whether a contractor would have difficulties in In granting damages, the court may also grant, among other
making a claim if it fails to comply with a provision in the things, exemplary or punitive damages to punish or deter the
contract which makes it a condition precedent for notice to defendant from similar behaviour in the future, or aggravat-
be given of the circumstances giving rise to the claim, would ed damages where the motive and conduct of the defendant
depend on the wording of the provision. If the requirement aggravated the plaintiff ’s injury.
for notice is interpreted as mandatory and not merely direc-
tory in nature, the contractor may have difficulties making a 8.2 Assessment of Damages
claim if it fails to comply with the notice requirement. Generally, damages would be assessed:

Similarly, whether a contractor would have difficulties in • in breaches of contract, by reference to the losses suffered
obtaining an extension of time in a situation where the con- at the date of the breach;
tractor fails to comply with a provision requiring notice to be • in anticipatory breaches, by reference to the losses that may
given for a claim for an extension of time would depend on be suffered when performance is due;
the wording of the provision. If the requirement for notice is • in tort, by reference to the date on which the innocent party
interpreted as mandatory and not merely directory in nature, suffered damage.
the contractor may have difficulties obtaining the extension
of time irrespective of whether the delay was caused by the 8.3 Parties’ Ability to Exclude the Recovery of
employer or a third party. Certain Losses
The parties are free, by their contract, to exclude the recover-
ability of certain losses. These clauses are commonly known
8. Damages as ‘exemption clauses’. Needless to say, such clauses would be
construed strictly against the party seeking to rely on them.
8.1 Monetary Remedies for Breach of Contract
In Malaysia, the primary remedy for breach of contract is If the terms of the exemption clause are so wide as to raise
an action for damages as opposed to an order for specific the prospect of an absurdity or defeat the main object of the
performance. Specific performance will only be granted in contract, such a clause may not be upheld. It does not excuse
limited circumstances. the party claiming the use of it from the burden of proving
that the damage caused was not due to their own negligence

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and misconduct. The party must still show that they have Where one party commits a breach which entitles the in-
exercised due diligence and care. They are not allowed to nocent party to terminate the contract, the innocent party
use such a clause as a cover-up. may expressly, or by conduct, elect to either:

8.4 Interest • accept the breach, and terminate the contract or bring the
Unless otherwise provided for by the contract or agreed by contract to an end; or
the parties, the courts or arbitral tribunal has the discretion • affirm the contract by treating it as remaining in force and
to award interest at such rate as it thinks fit on the whole or concurrently seek redress through a claim for damages.
any part of the debt due under the contract or on damages
and, in doing so, the court shall grant post-judgment interest An election has to be unequivocal and made without un-
not exceeding the rate of 5% per annum. reasonable delay to avoid allegations of acquiescence in the
continuance of the contract. What is ‘without unreasonable
The courts generally award simple interest and rarely award delay’ is peculiar to each case. The courts would look at the
compound interest. Further, it appears that the courts may facts and circumstances of each case to determine the elec-
also not award compound interest where the claim sought tion that was made.
for represents contractual interest.
Should the innocent party decide not to terminate, but in-
The treatment given by the courts to clauses stipulating in- stead accept the breach, it should place the contract breaker
terest are distinct from clauses stipulating damages payable on notice of its intention to seek compensation for any loss
in the event of a breach. The former would usually be upheld suffered as a result of the breach. Failing such a notice, the
as of right, whereas the latter would usually be construed in innocent party may not be entitled to such compensation.
accordance with Section 75 Contracts Act 1950. This section
has to some extent been discussed above in the Section 5.3 9.2 Rights to Determine the Contract
above dealing with Liquidated and Ascertained Damages. Determination clauses are regarded as a typical forfeiture
clause and usually strictly construed. An express provision
being a determination provision also attracts application of
9. Termination the contra proferentem rule and will therefore be strictly
construed.
9.1 Breach of Contract
Generally, one is entitled to terminate the contract if the Accordingly, one should strictly comply with the termina-
other party: tion clauses and any required pre-termination notices to
avoid the possibility of the termination being found to be
• breaches one or more of the terms contained in the con- wrongful.
tract, the breach of which provides an expressed right to
terminate the contract; or The consequences of a wrongful termination of a contract
• commits a repudiatory breach. A repudiatory breach is are far-reaching.
where one party made clear, by words or conduct, its inten-
tion not to honour its contractual obligations as and when 9.3 Termination for Non-Payment
they fall due. This is a common law breach that goes to the Where the construction contract gives the contractor the
root of the contract. Whether or not a particular breach right to terminate for non-payment of sums due or certified
of a contract amounts to a repudiatory breach is a matter for interim payment, the exercise of a right to determine
that must be carefully considered with the benefit of all the contract may, depending on the terms of the contract,
evidence and information relating to that particular breach. be affected by any valid set-off that the employer has and
notice of which has been given to the contractor irrespective
Instances where one may be entitled to terminate the con- of whether or not the set-off has been taken into account by
tract on the ground of repudiatory breach includes failure the certifier.
to carry out the works regularly and diligently, wholly or
substantially suspending works in circumstances where one Whether or not a termination is valid turns on the question
does not have the right to do so, non-payment of sums due of whether there was a valid reason, at the time of termi-
and payable, abandonment of works, persistent failure to nation, to terminate the contract. Whether the termination
commence works, delay in granting site possession, inter- party (subjectively) knew or believed there to be one is not
ference with works etc. relevant.

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Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

9.4 Material Breach Where CIPAA applies, a party may commence statutory
The effect of a provision in a construction contract allowing adjudication proceedings against the other party for con-
termination for a ‘material breach’ or ‘any material breach’ struction-related payments. It appears that the parties are
is that the innocent party may be entitled to terminate the not entitled to contract out of CIPAA.
contract if the contract breaker commits a ‘material breach’.
10.2 Arbitration
What amounts to a ‘material breach’ is peculiar to each con- As mentioned above, the courts are generally pro-arbitra-
tract. There is no cast in stone definition for ‘material breach’. tion. The courts are not entitled to intervene in any matters
governed by the AA save and except as permitted by the
Generally, a ‘material breach’ may be construed as a breach act. In fact, it is mandatory for the courts to stay any court
that goes to the root of the contract. In other words where proceedings relating to disputes which are the subject of an
one party has made clear, by words or conduct, its intention arbitration agreement in favour of arbitration unless it can
not to honour its contractual obligations as and when they be shown that (a) the party applying for a stay of proceed-
fall due. Whether or not a particular breach of a contract ings has taken definite, conscious and deliberate steps to
amounts to a material breach is a matter that must be care- participate in the court proceedings; or (b) the arbitration
fully considered with the benefit of all evidence and informa- agreement is null and void, inoperative or incapable of be-
tion relating to that particular breach. ing performed.

Instances where one may be entitled to terminate the con- The AA is modelled on the UNCITRAL Model Law on Inter-
tract on the ground of material breach includes failure to national Commercial Arbitration 1985 (with amendments
carry out the works regularly and diligently, wholly or sub- as adopted in 2006) (“Model Law”) and the New Zealand
stantially suspending works in circumstances where one Arbitration Act 1996.
does not have the right to do so, non-payment of sums due
and payable, abandonment of works, persistent failure to Among other things, the courts play a role in enforcing and
commence works, delay in granting site possession, inter- setting aside an arbitral award. Both awards that are made
ference with works etc. in respect of an arbitration where the seat of arbitration is in
Malaysia and where the seat of arbitration is not in Malaysia
are enforceable in Malaysia. However, for the enforcement
10. Dispute Resolution of an award in respect of an arbitration where the seat of
arbitration is not in Malaysia, such award must be an award
10.1 Litigation of a state which is a party to the 1958 Convention on Recog-
Typically, most large construction contracts contain arbitra- nition and Enforcement of Foreign Arbitral Awards (“New
tion clauses and any dispute arising therefrom would usually York Convention”).
be referred to arbitration.
In brief, the process of enforcement requires registration of
On the other hand, many informal or small construction the award as a judgment of the High Court. The application
contracts do not contain arbitration clauses and any dispute for enforcement is made ex parte, and is typically ordered as
arising therefrom would usually be referred to the courts. of right upon production of the arbitration agreement and
a duly certified copy of the award (with a translation into
In addition, since the coming into force of CIPAA there has English if in a foreign language). The order for registration of
been an increase in the number of construction-related pay- the award must be served on the respondent, who is given 14
ment disputes being resolved through adjudication. days to apply to set aside the registration. Enforcement of the
award is stayed pending the determination of the application
Generally, there are no restrictions on the ability of parties to set aside the registration of the award.
to a construction contract to have their dispute resolved by
dispute resolution methods that are alternative to determi- An arbitral award made in an arbitration where the seat of
nation in the national courts. In fact, the courts have gener- the arbitration is in Malaysia can be set aside by the Malay-
ally been pro-arbitration. sian courts in the circumstances set out in section 37 of the
AA which is in pari materia to Article 34 of the Model Law.
Pursuant to Section 4(1) of the Arbitration Act 2005 (‘AA’), Article 34 (1) of the Model Law, however, has been omitted
any dispute which the parties have agreed to submit to arbi- from the AA.
tration under an arbitration agreement may be determined
by arbitration unless the arbitration agreement is contrary Pursuant to Section 41 AA, any party may apply to the High
to public policy, which must be considered in a Malaysian Court to determine any question of law arising in the course
context. of the arbitration with the consent of the arbitral tribunal or

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 Law and Practice MALAYSIA
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

of every other party. The High Court, however, will not con- mately 100 days) in respect of payment for work done or
sider such an application unless it is satisfied that the deter- services rendered under the express terms of a construction
mination is likely to produce substantial savings in costs and contract which includes both a construction consultancy
substantially affects the rights of one or more of the parties. contract and a construction work contract as defined under
CIPAA. It appears that the parties cannot contract out of
Pursuant to Section 42 AA, any party may, within 42 days CIPAA.
of the publication and receipt of the award, refer to the High
Court any question of law arising out of the award which CIPAA applies to construction contracts made in writing
substantially affects the rights of one or more other parties. relating to construction works carried out wholly or partly
within the territory of Malaysia (including construction con-
Unless otherwise agreed, Sections 41 and 42 of the AA do tracts entered into by the Federal or State government) but
not apply to an international arbitration held in Malaysia but excludes construction contracts entered into by a natural
do apply to a domestic arbitration held in Malaysia. person for any construction work in respect of any build-
ing which is less than four storeys high and which is wholly
The parties are at liberty to pick the institution that would intended for that person’s occupation or those construction
administer arbitration proceedings including the institution- contracts which are exempted pursuant to Section 40 of the
al rules of arbitration that would apply to the arbitration. It CIPAA.
is not uncommon:
Currently, government construction contracts for any of the
• in architectural contracts, for the Malaysian Institute of following construction works are exempted from all provi-
Architects (PAM) to be named as the appointing author- sions of CIPAA:
ity and the rules of arbitration as maintained by PAM to
be adopted; • that is carried out urgently and without delay due to natural
• in contracts involving the government or government- disaster, flood, landslide, ground subsidence, fire and other
linked companies, for the director of the Kuala Lumpur emergency and unforeseen circumstances;
Regional Centre for Arbitration (“KLRCA”) to be named as • that relates to national security or security-related facili-
the appointing authority and the rules of arbitration main- ties which includes the construction of military and police
tained by the KLRCA to be adopted. facilities, military bases and camps, prisons and detention
camps, power plants and water treatment plants.
In the absence of an agreement on the appointing authority,
by default, the director of the KLRCA shall be the appoint- An adjudication decision is temporarily binding until:
ing authority. Where the director of the KLRCA is unable
to act or fails to act within a specified period of time, the • it is set aside by the High Court, on limited grounds;
High Court shall, on the application of either party, appoint • the subject matter of the decision is settled by a written
the arbitrator. agreement between the parties;
• the dispute is finally decided by arbitration or the court; or
The KLRCA also maintains fast-track arbitration rules de- • it is stayed by the courts pending an application to set aside
signed for parties who wish to obtain an award swiftly with the adjudication decision or pending the subject matter of
minimal costs. Unless extended, the arbitral award shall be the adjudication being decided by arbitration or the court.
published expeditiously and no later than 160 days from the
commencement of the arbitration. An adjudication decision is enforced by applying to the High
Court for an order to enforce the adjudication decision as if
The parties are free to agree on the language to be used in it is a judgment or order of the High Court.
the arbitration. Translators and interpreters are readily and
widely available. English is the main language of both law A dispute in respect of payment under a construction con-
and business in Malaysia, and most commercial arbitrations tract may be referred concurrently to adjudication, arbitra-
are conducted in English. Malaysia is a multiracial country tion or the court. However, an adjudication proceeding is
and one should not have difficulties in appointing an arbitra- deemed terminated if the dispute being adjudicated is settled
tor who is able to converse in English, Tamil, Mandarin and/ by agreement in writing between the parties or decided by
or Chinese dialect. arbitration or the court.

10.3 Adjudication The court or arbitral tribunal determining the same dispute
Where CIPAA applies, a party may refer a payment dispute that has been adjudicated is not bound by the adjudication
under a construction contract to adjudication. CIPAA allows decision.
an unpaid party to obtain a quick interim decision (approxi-

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MALAYSIA Law and Practice
Contributed by Lee Hishammuddin Allen & Gledhill Authors: Dato’ Nitin Nadkarni, Darshendev Singh

10.4 Expert Determination / Early Neutral As appears from the centre’s website, the centre is a member
Evaluation of the Asian Mediation Association and provides a compre-
In Malaysia, the parties do not usually refer their dispute for hensive range of services which include:
an ‘early neutral evaluation’. Furthermore, there are not many
organised institutions of experts. • professional mediation services by trained mediators who
have been accredited and appointed to the Panel of Media-
10.5 Mediation tors of the MMC;
Mediation is another form of alternative dispute resolution • assistance and advice on how clients may best look after
method in Malaysia which is commonly used. their interests in using alternative dispute resolution pro-
cesses such as mediation;
Unless otherwise agreed by the parties, there are no general • training in mediation techniques;
requirements that disputes ought to be mediated before de- • accrediting and maintaining a panel of mediators;
termination by the court or arbitration. However, it is not • consultancy services in dispute management and conflict
uncommon for the courts to request the parties to explore avoidance;
mediation. • administrative and secretarial support.

In fact, pursuant to Order 34 Rule 2 (2) (a) of the Rules of The KLRCA also maintains the KLRCA Mediation Rules to
Court 2012, the court at the pre-trial case management stage assist parties to resolve their disputes.
may consider directing the parties to go to mediation in ac-
cordance with any practice direction it issues. Usually, me-
diation will only be explored if all parties are agreeable to it.

The Malaysian Mediation Centre was established in 1999

under the auspices of the Bar Council with the objective of
promoting mediation as a means of alternative dispute reso-
lution and to provide a proper avenue for successful dispute
resolutions.

Lee Hishammuddin Allen & Gledhill

Level 6, Menara 1 Dutamas
Solaris Dutamas
No. 1 Jalan Dutamas 1
Kuala Lumpur
Malaysia 50480

Tel: +60 3 6208 5888

Email: [email protected]
Web: www.lh-ag.com

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