Federal Court finds CIPAA applies prospectively to construction contracts
28 January 2020
The Federal Court has recently clarified the application of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) through its judgments in Jack-In Pile (M) Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2019] 1 LNS 1566 and Ireka Engineering & Construction Sdn Bhd v PWC Corporation Sdn Bhd (Civil Appeal 02(f)-124-12/2018(W)). In both, the Federal Court considered whether CIPAA, which came into force on 15 April 2014, is to be construed as having retrospective or prospective operation.
The Federal Court noted that an Act of Parliament is not intended to operate retrospectively unless a contrary intention is evinced in express or unmistakable terms or in a language which is such that it plainly requires such a construction which is not found in the Act. The court, in its Jack-In Pile judgment, quoted its decision in Tenaga Nasional Bhd v Kamarstone Sdn Bhd [2014] 2 MLJ 749 where the court stated that it is indeed a rule of construction that a statute should not be interpreted retrospectively to impair an existing right or obligation, unless such a result is unavoidable by reason of the language used in the statute.
The Federal Court held in both cases that the CIPAA does not apply to construction contracts which were entered into before the act took effect. In other words, the CIPAA applies prospectively in the construction industry.