A case summary of Samsung C&T Corporation UEM Construction JV Sdn Bhd v Berkat Honeywell Sdn Bhd [2025] MLJU 2101
Introduction
The Construction Industry Payment and Adjudication Act 2012 (CIPAA) was enacted with the aim of safeguarding cash flow in the construction sector through a mechanism of swift and temporary adjudication. The process was designed to give contractors and subcontractors a quick route to resolve payment disputes without the long delays of arbitration or litigation. Over time, however, Malaysian courts have been called upon to draw clear lines on the limits of adjudicators’ powers and the scope of judicial intervention.
A recent decision of the High Court in Samsung C&T Corporation UEM Construction JV Sdn Bhd v Berkat Honeywell Sdn Bhd [2025] MLJU 2101 is a significant milestone in this regard. It reaffirms that adjudicators cannot overlook statutory requirements in payment claims and cannot conduct proceedings in a way that deprives parties of procedural fairness. The Court found that both excess of jurisdiction and denial of natural justice were present, and on that basis, the adjudication decision was set aside. This judgment, which is currently under appeal, is likely to have wide implications for the way payment claims are prepared and how adjudicators manage their proceedings.
Background Facts
The dispute arose from a major development in Kuala Lumpur, one of the largest construction projects in the country (the “Project”). In 2015, the project owner appointed Samsung C&T Corporation UEM Construction JV Sdn Bhd as the main contractor for the Project (“Contractor”). Two years later, a subcontractor, Berkat Honeywell Sdn Bhd was appointed under a subcontract valued at RM14.85 million to undertake the Building Management System works (“Subcontractor”).
In July 2024, the Subcontractor issued a Payment Claim for approximately RM12.61 million under CIPAA. The Contractor disputed the claim in its Payment Response. The matter proceeded to adjudication at the Asian International Arbitration Centre (AIAC). The parties exchanged adjudication papers thereafter.
The Contractor took issue with the Adjudication Reply because it raised new arguments and introduced numerous fresh documents. The Contractor requested leave to file a Rejoinder but this was refused by the adjudicator.
Thereafter, the adjudicator issued a decision in favour of the Subcontractor, ordering the Contractor to pay approximately RM2.47 million together with interest and cost (“Adjudication Decision”). In compliance with the Adjudication Decision, the Contractor made full payment under protest, and expressly reserved its right to challenge the decision. Ten days later, the Contractor filed an Originating Summons seeking to set aside the Adjudication Decision under Section 15 of CIPAA (“Setting Aside Application”).
Findings of the High Court
Preliminary Objections by the Subcontractor
The High Court began by addressing a preliminary objection raised by the Subcontractor in the Setting Aside Application. It argued that since the sums awarded had already been paid, there was no adjudication decision left to set aside, or alternatively, that the Contractor lost its right to challenge it. The High Court rejected this contention in strong terms, describing the submission as “absurd.” The learned Judge explained that while payment of the adjudicated sum may remove the need for enforcement, it does not take away the respondent’s right to apply to set aside the decision. The learned Judge further observed that the Contractor had expressly reserved its rights when making payment, and by accepting the sum, the Subcontractor was bound by that reservation. To argue otherwise was, in the learned Judge’s words, “untenable, and if I may say so, cunning.”
Grounds for Setting Aside- The Adjudicator had acted in excess of jurisdiction
The Court then turned to the substantive grounds under section 15 of CIPAA. The Contractor relied on two of them: excess of jurisdiction under section 15(d) and denial of natural justice under section 15(b).
On the question of jurisdiction, four objections were raised, the most significant being that the Payment Claim did not comply with section 5(2) of CIPAA. The Court found that the claim fell short because it failed to identify the specific contractual provisions under which payment was sought and omitted to state the due dates for payment. Instead, it merely referred in general terms to annexures without providing the necessary particulars. In addressing this defect, the Court emphasised, by reference to the Federal Court authorities in Anas Construction v JKP and View Esteem v Bina Puri, that strict compliance with section 5(2) is mandatory. Payment claims, the Court stressed, must be clear and self-contained, and respondents are not expected to “go figure out the details.”
The second objection concerned service. The Contractor argued that the Payment Claim was incomplete and that the Notice of Adjudication had been served by email, which is not one of the recognised methods under section 38 of CIPAA. The Court dismissed this objection because the Contractor had received the hardcopies in time and had in fact participated in the proceedings.
The third objection was based on clause 20.6 of the subcontract, which required disputes referred to adjudication to also be referred simultaneously to arbitration. The Court held that this clause governed arbitration rather than adjudication and did not restrict the adjudicator’s jurisdiction.
The fourth objection proved more persuasive. The Court noted that the adjudicator had relied on Interim Payment Certificate No. 81 when making his decision, even though the Payment Claim was expressly founded on IPC 74. Referring to the Federal Court’s guidance in Anas Construction, the Court held that the adjudicator had gone beyond his jurisdiction by deciding a matter that was never raised in either the Payment Claim or the Payment Response.
Grounds for Setting Aside- Breach of Natural Justice
Apart from finding an excess of jurisdiction, the High Court also held that there had been a denial of natural justice. Three instances were identified. First, the Contractor had raised a set-off for liquidated and ascertained damages (LAD). The adjudicator dismissed it on the basis that he lacked jurisdiction, as the set-off had not been raised prior to the Payment Claim. The High Court found this reasoning flawed and held that the adjudicator ought to have invited submissions on the issue before making a determination on jurisdiction.
Secondly, both parties had submitted expert reports on delay and extension of time. These were central to the dispute, yet the adjudicator’s decision was silent on them. The High Court held that this amounted to a denial of natural justice, since an adjudicator must at least deal with the key issues presented.
Thirdly, the Court found that the adjudicator’s refusal to allow a Rejoinder was unjust. The Subcontractor’s Adjudication Reply had introduced new issues and a large volume of documents, yet the Contractor was denied the chance to respond. The High Court observed that section 12 of CIPAA allows for extensions of time with the parties’ consent, and that basic fairness required the respondent to be heard on the new material.
For these reasons, the High Court set aside the adjudication decision and ordered the subcontractor to refund the RM2.47 million received, together with interest, to the contractor.
Comments
This case has several implications for the construction industry and the practice of adjudication under CIPAA.
First, it confirms that strict compliance with section 5(2) is required. Payment claims must be complete, precise, and self-contained. Claimants cannot rely on vague references to documents not attached, nor can they omit due dates. The payment claim is the jurisdictional foundation of the adjudicator’s authority, and any defect may render the entire process void.
Secondly, the case clarifies the boundaries of jurisdiction under section 27. Adjudicators must confine themselves to what is contained in the Payment Claim and Payment Response. They cannot decide claims based on documents or arguments introduced later in the process unless both parties’ consent. This is consistent with the Federal Court’s strict approach in Anas Construction.
Thirdly, the case illustrates the importance of natural justice even in the context of expedited adjudication. While speed is an essential feature of CIPAA, it does not justify ambushing the other side with new evidence at the last stage or refusing reasonable opportunities to respond. Adjudicators must strike a balance between efficiency and fairness, and the courts will intervene where the balance has been lost.
Fourthly, the judgment clarifies that payment under an adjudication decision does not preclude a later challenge if the paying party expressly reserves its rights. This is significant for respondents who wish to avoid enforcement proceedings but also intend to test the validity of the decision in court.
Whether the Court of Appeal affirms this strict approach will determine the trajectory of CIPAA adjudication in Malaysia. For now, the case serves as a cautionary tale: speed is important, but statutory compliance and fairness remain the bedrock of the system.
About the authors
Ooi Hui Ying
Partner
Dispute Resolution
Harold & Lam Partnership
huiying@hlplawyers.com
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