The withholding of retention sums is one of the most common causes of payment disputes in the Malaysian construction industry. Many sub-contractors wait years to recover their retention — but under CIPAA 2012, there is a faster route.
What is a Retention Sum?
A retention sum is typically 5% to 10% of each progress payment, withheld by the Main Contractor as security for the sub-contractor’s performance. It is usually released in two halves — half upon practical completion, and the remaining half upon expiry of the defects liability period (DLP).
Can You Claim Retention Under CIPAA?
Yes. The Malaysian courts have confirmed that a sub-contractor can file a CIPAA Payment Claim for retention sums that have become due and payable under the contract. If practical completion has been certified and the first moiety of retention is due, or if the DLP has expired and the second moiety is due, you have a valid CIPAA claim.
Common Respondent Defences
Main Contractors often resist retention claims by alleging outstanding defects, uncompleted snagging items, or pending final account settlement. These defences must be particularised in the Adjudication Response — vague allegations of defects are generally not accepted by adjudicators.
How Long Can You Wait?
Under Section 30A of the Limitation Act 1953, the limitation period for construction claims is generally 6 years from the date the cause of action accrued. Do not wait indefinitely — if your retention is overdue, take action promptly.
WE Project Management PLT has successfully recovered retention sums for numerous sub-contractors through CIPAA adjudication. Contact us for a free assessment of your retention claim.