Is breach of natural justice a defence to enforcement of Adjudication Decision?

S.15 CIPAA provides that breach of natural justice or excess of jurisdiction are among grounds to set aside an Adjudication Decision. However, if a party fails to apply to set aside the decision, can he still rely on these grounds to resist the enforcement of an Adjudication Decision?

In Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd, the Court of Appeal considered precisely this question. In that said case, Inai Kiara received a favourable Adjudication Decision which it sought to enforce in the High Court. Puteri Nusantara did not apply to set aside the Decision, but argued that the Adjudicator had nevertheless acted in excess of his jurisdiction. Excess of jurisdiction is a ground to set aside the decision under s.15(d).

The learned Judge agreed that the Adjudicator had acted in excess of his jurisdiction, and therefore refused to enforce the decision. Dis-satisfied, Inai Kiara appealed. The issue to be decided by the Court of Appeal was whether a party can rely on excess of jurisdiction (under s15(d) CIPAA) when it did NOT apply to set aside the decision under s.15.

The Court of Appeal disagreed with the High Court Judge. The learned Mary Lim JCA said that a party cannot “invoke any of the grounds set out in s.15(a) to (d) in opposition to an application under s.28 (for enforcement) without at the same time, filing an application under s.15 itself to set aside the adjudication decision on any of those grounds”.

With due respect, this decision may be introducing an unnecessary technicality to CIPAA.

For example, s.15(a) CIPAA says that a decision can be set aside if it was procured through fraud and bribery. Does that mean that if a party can show evidence of fraud and bribery, the decision must still be enforced if for any reason whatsoever, his lawyer failed to apply to set aside the decision under s.15(a) CIPAA? Surely the enforcement of any decision that was procured through fraud and bribery would be patently against public policy.

The general principle of law is that the courts would not assist any party who had participated in unlawful/illegal acts. Surely the Courts should not impose a technical requirement for the party to make the formal application before taking cognisance of such acts (if indeed proven).

And if the Courts were to take cognisance of s.15(a) without an application to set aside, then clearly the factors set out in s.15(b) to (d) ought also be taken into account.

Nevertheless, the above is just my view on the matter. The Court of Appeal has clearly taken a different view of the same. Such being the case, one now must necessarily apply to set aside a decision if any of the factors of s.15(a) to (d) come into play, otherwise they would not be considered as legitimate defences against an enforcement application under s.28.

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

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