CIPAA 2012 — Frequently Asked Questions

CIPAA stands for the Construction Industry Payment and Adjudication Act 2012. It is a Malaysian law that came into force on 15 April 2014. It gives contractors and sub-contractors a fast, affordable way to recover outstanding payment under a written construction contract through a legal process called adjudication.

CIPAA was introduced to address the serious problem of delayed and withheld payments in the Malaysian construction industry, which had for many years disadvantaged smaller contractors and sub-contractors.

Any party to a written construction contract in Malaysia can use CIPAA — including sub-contractors, main contractors, suppliers, nominated sub-contractors, and consultants. CIPAA applies to both private and government construction contracts.

CIPAA can be used to recover a wide range of unpaid amounts under a construction contract, including:

• Unpaid progress payments (interim certificates)
• Retention sums not released by the due date
• Final account disputes
• Disputed back-charges and deductions
• Variation work not certified or paid
• Extension of time and prolongation costs

No. CIPAA only applies to written construction contracts. However, a contract does not have to be in a single formal document — it may be made up of a letter of award, purchase orders, email exchanges, site instructions, and drawings. Contact us and we will help you determine whether your agreement qualifies.

A CIPAA adjudication typically concludes within 80 to 95 working days from the date your Payment Claim is served on the Respondent. This is considerably faster than litigation in the courts, which can take years.

A Payment Claim is a formal written claim served by the unpaid party (the Claimant) on the party who owes the money (the Respondent). Under CIPAA, it must comply with specific requirements — including the amount claimed, the contract reference, and the basis of the claim. It must be served in accordance with Section 4 of CIPAA.

Getting the Payment Claim right is critical. Errors or omissions can affect the validity of your claim. This is why it is important to engage an experienced consultant from the start.

If the Respondent does not serve a Payment Response within 10 working days of receiving your Payment Claim, they are deemed to have accepted your claim. The adjudication proceeds and a decision is very likely to be issued in your favour for the full amount claimed.

There is no right of appeal against an Adjudication Decision under CIPAA. The Respondent may apply to the High Court to have the decision set aside under Section 15 of CIPAA, but the grounds are extremely limited — essentially confined to fraud, breach of natural justice, and jurisdictional errors.

The decision is immediately binding and enforceable, even while any set-aside application is pending. This is one of CIPAA's most powerful features for claimants.

If the Respondent refuses to comply with the Adjudication Decision, you can:

• Enforce the decision as a court judgment via the High Court under Section 28 of CIPAA
• Apply for a Stay of Construction Works — suspend your work until payment is made
• Apply to the court for direct payment from the principal (the party above the Respondent)

We handle enforcement proceedings and will advise you on the fastest route to recovery.

The main costs in a CIPAA claim are:

• Adjudicator's Fee — set by AIAC based on the claim amount (Regulation 6, CIPAA Regulations 2014)
• AIAC Administrative Fee — 20% of the Adjudicator's Fee
• Your representative's professional fee

Both parties normally share the adjudicator and AIAC fees equally upfront. The losing party is typically ordered to pay all costs, so if you win, your costs may be fully recoverable.

There is no statutory minimum claim amount under CIPAA. However, for very small claims, the adjudicator and AIAC fees may not be proportionate to the amount you are trying to recover. Contact us and we will advise you honestly — without obligation — whether CIPAA is the right route for your situation.

Yes. Under CIPAA, the Adjudicator has discretion to award costs — including representative fees — to the winning party. In most cases where the Claimant succeeds, the Respondent is ordered to bear the costs of the adjudication. This significantly reduces your net financial risk in bringing a claim.

No. CIPAA does not require you to engage a lawyer. A qualified construction claim consultant — like WE Project Management PLT — can represent you throughout the entire process, from serving the Payment Claim to receiving the Adjudication Decision.

Our fees are typically lower than legal representation, and our team has handled over 800 CIPAA cases. We focus exclusively on construction payment disputes — this is our core expertise.

Yes. WE Project Management PLT provides full service in Mandarin (普通话), Cantonese (广东话), and Hokkien (福建话). We understand that many sub-contractors and construction business owners feel more comfortable discussing their situation in their own language — and this can make a significant difference in how well your case is understood and presented.

您可以用中文与我们沟通。我们全程提供中文服务，包括普通话、广东话和福建话。

We have handled over 800 CIPAA cases since our founding in 2016, with a success rate exceeding 90%. Our experience covers claims ranging from small sub-contractor disputes to multi-million ringgit final account adjudications.

We will tell you honestly during your free consultation whether we believe you have a strong case — we do not take on cases we do not believe in.

Contact us for a free initial consultation — by phone, WhatsApp, or email. We will review your situation and give you an honest assessment of your options under CIPAA 2012, with no obligation and no hidden fees.

To help us assess your case quickly, have the following ready if possible:
• Your written contract or letter of award
• Payment certificates or progress claim records
• Any correspondence with the other party about the dispute
• The amount you believe is owed to you