Stay Of RM25 Million Adjudication Decision On Merdeka 118 Project Successfully Obtained

T Kuhendran, Daniel Lau and J Agesh from Zul Rafique & Partners' Construction Dispute Resolution Practice Group, have successfully obtained an Order from the Kuala Lumpur High Court ("High Court") for a conditional stay of an Adjudication Decision for RM25mil ("AD") pending arbitration in favour of its client ("Contractor") against the counterparty ("Subcontractor").

The Subcontractor had obtained the aforementioned AD against the Contractor and sought enforcement of the AD. In the meantime, arbitration proceedings were initiated between the Subcontractor and the Contractor.

The Contractor proceeded to file an application for the AD to be stayed whilst the subject matter of the AD is pending final determination by way of arbitration pursuant to Section 16(1)(b) of the Construction Industry Payment and Adjudication Act 2012 (the "Application").

The grounds of the Application were based on:-
(a) the inability of the Subcontractor to repay the AD sum should the Contractor win at arbitration; and
(b) errors in the AD.

Upon reading and hearing submissions from counsels for both parties, the High Court allowed the Application with no order as to costs, on the ground that there is a risk that Subcontractor will be unable to repay the Contractor if the Contractor succeeds in arbitration. The High Court granted a stay and ordered that the adjudicated sum be held by solicitors as stakeholders until the disposal of the arbitration proceedings.