Background

In a ground breaking legal development within the Malaysian construction industry, the case of Mir Valve Sdn Bhd (“MVSB”) v TH Heavy Engineering Bhd unfolded under the ambit of the Construction Industry and Payment Adjudication Act 2012 (“CIPAA 2012”). MVSB, seeking recourse for unpaid invoices totalling USD 404,930.75, initiated adjudication proceedings against TH Heavy Engineering Bhd (“TH”). The dispute stemmed from work undertaken by MVSB on converting a ship into a Floating Production Storage and Offloading (“FPSO”) vessel. Acting on behalf of MVSB, our legal team played a pivotal role in navigating the complexities of CIPAA 2012, a legislation designed to streamline payment disputes in the construction industry.

Approach

Faced with TH’s resistance and a critical challenge to the adjudication decision, our legal approach was multifaceted. We filed an application to enforce the adjudication decision, emphasising the validity of MVSB’s claim for unpaid invoices. Simultaneously, TH countered by filing an application to set aside the adjudication decision, arguing that the adjudicator had exceeded jurisdiction and contending that the conversion work on the ship did not qualify as ‘construction work’ within the purview of CIPAA 2012. Our legal strategy meticulously dissected the definition of ‘construction work’ under CIPAA 2012, presenting a compelling case that the transformation of a ship into an FPSO vessel indeed constituted construction work. The intention was clear – to establish legal precedent and clarity on the applicability of CIPAA 2012 to such conversion projects.

Outcome

In a landmark ruling, the High Court not only allowed MVSB’s application to enforce the adjudication decision but also dismissed TH’s application to set aside the decision. The court’s recognition that the conversion work, transforming a ship into an FPSO vessel, falls within the ambit of ‘construction work’ marked a precedent-setting moment in Malaysian jurisprudence. This decision clarified the application of CIPAA 2012 to projects involving the transformation of ships into specialized structures for industries such as oil and gas. The case of Mir Valve Sdn Bhd v TH Heavy Engineering Bhd stands as the first in Malaysia to explicitly acknowledge such conversion works as falling under the purview of CIPAA 2012, setting a crucial precedent for future disputes in the realm of construction law.