Contractor disputes and how CIDB license protects the interest of the Management

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Those who are working in the construction industry may have seen their shares of conflicts due to various contractual relationships, project complexity, financial stake and also its schedule-based pressures. 

Construction Disputes arises from both legal and technical aspects of the project, it should be noted that technical disputes takes most of the limelight involving the duration, finance and quality of work done by contractors. Therefore, having litigation may even escalate the situation negatively towards the project managers as it will inevitably prolong cases and incur the cost of legal fees for both parties. The process itself will no doubt negatively impact the working relationship between the Companies and potential values that may be given by both parties during the process.

Due to this, an Alternative Dispute Resolution (ADR) can be used to resolve disputes at a faster and more cost effective manner by the use of arbitration and mediation. CIDB itself is a “advocating statutory adjudication” as a suitable dispute resolution in the construction industry.

During the start of conflict resolution between parties, CIDB can be appointed as a mediator for both parties to resolve any dispute or differences in which the resolution shall be recorded in a settlement agreement which both parties shall give effect to the agreement accordingly. The mediation between two Companies shall be conducted in accordance with the CIDB Mediation Rules.

To highlight the benefits of having CIDB act as a neutral third party appointed in the mediation, the officers in charge are specialized and equipped with a vast knowledge of the construction industry, they are allowed to facilitate the amicable exchange of documents between parties and may even render advisory opinion on matters relating to the matter in a case-by-case basis. Mediation also provides a space between parties to negotiate any forms of resolution which may provide both parties a win-win situation. As this inevitably saves time and expenses for the parties, mediation has started gaining traction in Malaysia as the first-tier dispute resolution for a number of Malaysian construction contracts.

In the event that the Contractors or Contracting Company are unable to reach a settlement at this stage, either party is allowed to escalate this issue directly and allow the CIDB to act as an arbitrator.

Referring to the CIDB Standard Form of Contract 2000’s Article 47, The standard contractual forms has adopted arbitration as a final form of dispute resolution whereby CIDB (as a neutral third party appointed) holds the power to conduct the following actions:

  1. Open up, review and revise any certificate, opinion, decision, requisition or notice; and
  2. Determine all matters in dispute which shall be submitted to him; and
  3. Award damages including interest or financing charges for the period before and after the date of award at such rate as he may in his discretion consider to be appropriate.

In order to further understand the concepts between arbitration and mediation or if you would like to consult us on issues arising from any disputes, please do not hesitate to contact us on the contact form below

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