# CIPAA: Statutory Adjudication for Construction Payment Disputes

> How the Construction Industry Payment and Adjudication Act 2012 lets an unpaid party force a payment dispute to a binding decision in a matter of weeks — and what the (Amendment) Act 2024 and its 2025 Regulations, in force from 1 January 2026, actually changed.

- Category: business
- Language: en
- Status: published
- Updated: 2026-08-07
- Canonical: https://negaraku.md/en/business/cipaa-construction-adjudication-malaysia

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A subcontractor who has not been paid for six months does not have to wait years for a court date. Under CIPAA, they can force the dispute to a binding decision in a matter of weeks — and the clock is unforgiving on both sides.

## What is CIPAA and who does it cover?

The Construction Industry Payment and Adjudication Act 2012 created a statutory adjudication process to settle payment disputes quickly, as an alternative to the slower, costlier routes of arbitration or litigation. It applies to construction contracts made in writing and carried out in Malaysia, and it cannot be contracted out of.

Adjudication is administered by the Asian International Arbitration Centre (AIAC) — the body formerly known as the Kuala Lumpur Regional Centre for Arbitration (KLRCA).

## How does the process run, step by step?

The strength of CIPAA is its fixed rhythm. Each stage has a statutory deadline measured in working days.

| Step | Deadline |
|---|---|
| Payment response after a payment claim (s.6) | 10 working days |
| Parties agree an adjudicator after the notice of adjudication | 10 working days |
| AIAC appoints one if they cannot agree | 5 working days |
| Adjudication claim after acceptance of appointment | 10 working days |
| Adjudication response | 10 working days |
| Adjudication reply | 5 working days |
| Adjudicator's decision (s.12) | 45 working days |

The payment claim (s.5) must be in writing and state the amount claimed, the due date, and enough detail of the work to identify the dispute. If the non-paying party lets the 10-working-day response window lapse, it is deemed to have disputed the entire claim — and it has surrendered the chance to set out its side of the story.

## What makes the decision deadline so strict?

Section 12 is the sharpest edge of the Act. The adjudicator must deliver the decision within 45 working days of the response or reply being served, or of the deadline for the response passing where none is served. A decision made outside that period is void — not merely late, but of no legal effect. That discipline is what keeps CIPAA fast, and the 2024 amendment tightened it further: an extension of time now requires the consent of both parties and the adjudicator, rather than being readily available.

The decision is binding and enforceable, but it is not the last word: a party dissatisfied with it can still pursue the same dispute in arbitration or court. Until a final tribunal rules otherwise, the adjudication decision stands and the money must be paid.

## What did the 2026 amendment actually change?

Quite a lot. The Construction Industry Payment and Adjudication (Amendment) Act 2024, gazetted as Act A1738, came into operation on 1 January 2026, together with the Construction Industry Payment and Adjudication (Amendment) Regulations 2025 (published in the Federal Gazette on 24 December 2025).

The most visible change is institutional. The Act removes references to the "KLRCA" and substitutes the "AIAC" throughout, and practitioner commentary reports that the former "Director" role is recast as a "President." That brings CIPAA into conformity with the supplementary agreement executed between the Government of Malaysia and AALCO on 20 February 2024.

But A1738 is more than a renaming exercise. According to practitioner analyses of the amended Act and the 2025 Regulations, it also:

- tightens the adjudication timeline, making extensions of time harder to obtain — an extension now requires the consent of both the parties and the adjudicator;
- introduces enhanced payment-notice requirements and prescribed forms under the 2025 Regulations, so claims must be served on the current AIAC templates or risk procedural objection;
- clarifies and expands key definitions to reduce jurisdictional challenges over what counts as a construction contract; and
- strengthens the enforcement route, with clearer grounds for setting aside a decision, while retaining and clarifying the section 30 direct-payment mechanism.

The Minister of Works announced the reform package on 18 September 2025, describing it as intended to foster transparency, competitiveness and confidence in the construction industry. The core payment-claim and 45-working-day decision framework survives, but the procedure around it has changed materially.

## What's next

If you are owed money on a Malaysian construction project, the first move is a properly drafted payment claim under section 5 — everything downstream keys off its service date. If you have received one, diarise the 10-working-day response deadline immediately; silence forfeits your defence. Because the amended terminology, tighter timelines and prescribed forms apply to references filed from 1 January 2026, confirm you are using the current AIAC forms before serving anything.

## Sources

- CIPAA: Resolving Construction Payment Disputes Expeditiously — https://thomasphilip.com.my/articles/cipaa-resolving-construction-payment-disputes-expeditiously/ (Thomas Philip Advocates and Solicitors)
- Overview of Adjudication Process in Malaysia — https://www.kevinwuassociates.com/post/overview-of-adjudication-process-in-malaysia (Kevin Wu & Associates)
- Construction Industry Payment and Adjudication (Amendment) Act 2024 — https://www.zulrafique.com.my/article-sample.php?id=2387 (Zul Rafique & Partners)
- The Arbitration (Amendment) Bill 2024 and CIPAA (Amendment) Bill 2024: Reshaping Malaysia's ADR Landscape — https://tsl-legal.com/the-arbitration-amendment-bill-2024-and-cipaa-amendment-bill-2024-reshaping-malaysias-adr-landscape/ (TSL Legal)
- CIPAA Amendments Malaysia 2026 — https://globallawexperts.com/cipaa-amendments-malaysia-2026/ (Global Law Experts)
- Construction Industry Payment and Adjudication Act changes to boost transparency, confidence — https://dayakdaily.com/construction-industry-payment-and-adjudication-act-changes-to-boost-transparency-confidence/ (DayakDaily)

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