Can parties contract out of CIPAA 2012?*

In the case of Aspen Glove Sdn Bhd v Tialoc Malaysia Sdn Bhd [2024] 7 CLJ 1, the Court of Appeal had to consider the case of parties who signed the FIDIC Construction Contract 2017. It was part of the terms of the FIDIC 2017 contract that parties agree to refer their disputes to the Dispute Avoidance Adjudication Board (“DAAB”).

The question therefore is whether the agreement of parties to refer to contractual adjudication is binding, and therefore parties would be estopped from referring their dispute to statutory adjudication under CIPAA 2012.

The Court of Appeal definitively rejected the notion that contractual adjudication could be a bar to statutory adjudication. To support such a contention would effectively mean that parties would be allowed to contract out of CIPAA 2012.

The Court of Appeal further concluded that any contract that seeks to contract out of CIPAA 2012 would be void for being against public policy, contrary to s 24 of the Contracts Act 1950.

TLDR: Contractual adjudication provisions cannot stand in the way of vested statutory rights to commence statutory adjudication.

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