The Specialised Construction Court, that has been in the works for years is expected to be set up very soon, perhaps as early as this month, Business Circle has learned. A practice direction on the court is expected to be circulated sometime soon.
It is understood that there will initially be two specialised construction courts – in the High Court of Kuala Lumpur and Shah Alam. “Depending on the number of cases and the feedback from the Bar Council and industry players, the number of courts may be increased,” says a source close to the Chief Justice’s Office.
The industry, as well as the Bar Council, lauds the setting up of the specialised court.
The Construction Industry Development Board (CIDB) had mooted the idea of a specialised construction court some time ago on overwhelming industry support. However, this comes under the purview of the Malaysian judiciary, says Noridah Shafii, General Manager Business Division, CIDB.
The decision to set up the construction court is long overdue, says Wilfred Abraham, Chairperson of the Sub-Committee on Construction Law of Bar Council Malaysia.
“The construction industry is amongst the more considerable users of the court system and the move will definitely benefit the industry,” he says.
Master Builders Association Malaysia (MBAM) president Matthew Tee concurs.
According to Tee, having a specialised court was amongst the many objectives under the 2007 Construction Industry Master Plan (CIMP) to help the Malaysian construction industry achieved global standards. In 2012, the Construction Industry Payment and Adjudication Act (CIPAA) was passed to deal with issues of non, late and under payment and to address cashflow problems plaguing the industry, thus offering statutory adjudication as an alternative resolution for disputes in the construction industry. “Nevertheless, there is still the need for construction litigation and/or arbitration to re-determine any unsatisfactory adjudication decisions in view of the technicalities, complexity of development and construction work. Hence the need for a robust and specialised court support,” says Tee.
Backlog of construction cases is reported to be high but no statistics are publicly available.
“We do not have backlog statistics, which in any event is not the primary consideration for the setting up of the construction court. The primary consideration is for construction related disputes to be dealt with in a timely, cost-effective and efficient manner with specialist judges familiar with construction disputes and the technical nature of these disputes,” says Abraham.
CIDB’s Noridah notes that construction cases in the High Court are presently tried before various judges, mostly in the civil division in Kuala Lumpur and Shah Alam. “These cases would normally take several years to dispose of. With the rapid pace of growth in the construction sector, construction cases will likely grow too. The CIDB foresees that even complex construction cases can be disposed of in less than two years with the establishment of the construction court.”
MBAM reckons the twin combination of CIPAA and a special construction court will spur “continuous improvement in delivering high quality justice within reasonable time and cost for the betterment of the Malaysian construction industry. A paradigm shift in the right direction has begun for a transformation in construction law and a reform in the nation’s construction industry,” opines Tee.
The Malaysian court system already has several specialised courts in place, such as intellectual property, Islamic banking, corruption and environmental courts.
“The empirical evidence shows that specialised courts do assist in any area as long as there is a need for them in terms of the number of cases in those areas,” adds Abraham.
As for Malaysia’s low ranking in World Bank’s Ease of Doing Business Index in terms of dealing with construction permits, CIDB says it has been aggressive in improving the ease of doing business in particular those related to construction permits.
“A recent initiative has been in the area of harmonizing the registration of contractors. Prior to this, contractors who wish to procure government projects have to register with two government agencies, namely Pusat Khidmat Kontraktor (PKK) and CIDB. CIDB and PKK have since harmonized the registration requirements for contractors. Beginning October last year, contractors now only need to register with CIDB regardless of whether they are participating in government or private tenders,” informs Noridah.
MBAM points to the fact that though the ranking may be considered low, Malaysia has moved up 20 spots from 116 (2012) to 96 (2013).
Compared to Singapore however, which has maintained its No.2 ranking, there is still much more to be done, especially when the Malaysian construction industry and the services sector are expected to play a vital role by contributing 11.2% to the 2013 GDP growth.
In order to achieve this challenging target, the Government and the private sector must work closely together to ensure projects under the Economic Transformation Programme (ETP), the Entry Point Projects (EPP), projects under the five corridors and the Greater Kuala Lumpur and Klang Valley, Rural Transformation Programme (RTP) and Urban Transformation Programme (UTP) initiatives are implemented in a timely and responsible manner. “This is important as these projects will not only cost more if delayed, the benefits such as economic efficiency, growth and eradication of poverty will also be delayed or not achieved. Thus, improving our ranking in this particular category will definitely help,” opines Tee.