Datuk Prof Sundra Rajoo AZHAR MAHFOF/The Star.
KUALA LUMPUR: The Kuala Lumpur Regional Centre for Arbitration (KLRCA) has launched a set of standard-form building contracts. becoming the first arbitral institution in the world to launch this kind of suite for all building construction projects in the country.
The non-profit, non-governmental organisation said in a statement that its Standard Form of Contracts (SFC) was inspired by the prevalent issues plaguing the Malaysian construction industry.
“They are aimed at filling the gaps of existing standard form building contracts in governing relationships, rights and duties of parties to a building construction project,” it said.
The country’s first Construction Industry Payment and Adjudication Act-compliant suite of building contracts was launched on Tuesday in Kuala Lumpur.
“(It) contains more mechanisms for parties to resolve disputes and deadlocks including mediation, encouraging parties to continue work despite disputes, while preserving parties’ rights till completion – making continuity of works and working relationships its highest priorities,” KLRCA said.
The half-day event began with remarks by KLRCA director Datuk Professor Sundra Rajoo and presentations on the Introduction to the Contracts, Advantages of the Contracts and Key Features of the Contracts Website.
At the launch, Sundra touched on KLRCA’s existing relationship with the construction industry.
“The players of the construction industry have already benefited from the efficient dispute resolution processes and acknowledge our continuous efforts to further tailor the legal framework to their needs. There is no better illustration than our recent statistics; as of today, we have more than 1,100 registered cases (as compared to 22 cases in 2010),” he said.
“Although the numbers are impressive, the problem runs deeper – and rather than just hacking at the leaves it would be better to dig at the roots instead. We have come to realise that the problem goes beyond simple payment issues and stems from the contracts used by the parties.”
Offering KLRCA’s SFC as solution to these issues, he explained: “KLRCA’s SFC were engineered in a way to become a hybrid that bridges and fills the gaps of local and foreign standard form contracts with due consideration given to current laws and judicial precedents impacting the Malaysian construction industry while simultaneously maintaining a recognisable model.”
Minister in the Prime Minister’s Department, Datuk Seri Azalina Othman Said, who attended the function, said: “In the short space of just three months, led by the Government of Malaysia’s vision of improving the nation’s construction industry, Datuk Professor Sundra Rajoo and his KLRCA team together with a line-up of dedicated industry experts making up the advisory committee embarked on a tedious and arduous journey to produce a more complete, refined and easy-to-use suite of standard form of building contracts: the KLRCA Standard Form of Contracts (SFC).
“While several standard form of building contracts already exist in the market today, there remain noticeable gaps that require addressing and bridging. KLRCA saw the need to address this. The role of an ADR (alternative dispute resolution) centre has gone beyond the days of just merely resolving disputes. It now also extends to dispute avoidance.”
KLRCA said these Malaysia-centric contracts would be tweaked in the coming months to meet and suit international standards for projects outside Malaysia.
KLRCA’s SFC is the centre’s second significant product launch this year. In May, during the Kuala Lumpur International ADR Week 2017, the centre introduced its 2017 Arbitration Rules.
Included in the new rules are many new provisions to ensure expeditious and cost-effective administration of arbitration proceedings.
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