Can CIPAA apply when the contract is subject to foreign law?

If a construction contract is subject to foreign law, and parties have submitted to the jurisdiction of a foreign court, can CIPAA apply?

YES. CIPAA is a statute, and will apply to payment disputes arising from written construction contracts whereby the works are wholly or partly carried out in Malaysia. There is simply no contracting out of CIPAA.

Even when parties submit to the jurisdiction of a foreign Court, it does not oust CIPAA, or the jurisdiction of the High Court to enforce CIPAA decisions.

In Comsite Projects Ltd v Andritz AG, the contract states that all disputes are subject to the exclusive jurisdiction of the Austrian Courts, and that Austrian law shall apply. Notwithstanding such a clause, the UK Court enforced the adjudication decision. However, any further and final dispute arising between the parties would then have to be resolved by the Austrian Court applying Austrian law.

In that sense, entering into a contract that is subject to foreign law and submitting to a foreign jurisdiction would only mean that the final dispute would have to be resolved following the clause. CIPAA which provides temporary finality continues to apply between the parties in the meantime.

Kheng Hoe Advocates advises clients on arbitration, litigation, adjudication (CIPAA) and mediation of construction disputes. We can be reached at khenghoe@khenghoe.com. 

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