PORATHA E & C SDN. BHD. v PETROFAC ENGINEERING SERVICES (MALAYSIA) SDN. BHD

Case Significance

Illustrates the exceptional and narrow grounds for setting aside a CIPAA adjudication decision under section 15 — a real possibility of bias, breach of natural justice or excess of jurisdiction — and the courts' resistance to tactical post-award challenges that would dilute the finality of the adjudication regime.

This High Court decision in the Construction Division at Kuala Lumpur concerns an application to set aside an adjudication decision made under the Construction Industry Payment and Adjudication Act 2012 (CIPAA). The plaintiff, Poratha E&C Sdn Bhd, had been the claimant in the adjudication against the defendant, Petrofac Engineering Services (Malaysia) Sdn Bhd, arising from a subcontract for mechanical and related works on an engineering, procurement and construction project. The adjudicator dismissed Poratha's claim entirely and ordered it to pay costs of RM310,320.00. Poratha applied to set the decision aside under sections 15(b), 15(c) and 15(d) of CIPAA, alleging a denial of natural justice, a failure by the adjudicator to act independently and impartially, and an excess of jurisdiction.

The grounds arose from a single matrix: at the time of his appointment the adjudicator was acting as lead counsel in a separate High Court originating summons in which the opposing counsel was the same lawyer who acted as Poratha's lead counsel in the adjudication. Poratha said this concurrent adversarial relationship created a "perceived enmity" and a reasonable suspicion of bias, and that the adjudicator ought to have disclosed it or recused himself.

The court rejected each ground. It held that the concurrent involvement in a different matter, a different contract and a different project did not give rise to a real possibility of bias, whether analysed as "double-hatting" or "perceived enmity", and that Poratha had not identified any step in the adjudication showing partiality. The failure to formally disclose the other proceedings had no operative legal consequence, since the circumstances did not trigger a duty to disclose; there was no denial of natural justice, Poratha having been heard and having participated fully; and its conduct in proceeding with the adjudication and reviving the challenge only after an adverse decision was a tactical post-award challenge that CIPAA discourages. The application was dismissed with costs of RM10,000.00. The judgment illustrates the exceptional and narrow basis for setting aside a CIPAA adjudication decision.