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The Need for Certainty and Clarity

17 June 2019

The Need for Certainty and Clarity Image

A speaker at CABE Malaysia Annual Conference 2019, Swee Im Tan talks to Building Engineer about her work as a third party neutral in Kuala Lumpur for 39 Essex Chambers. Involved in many of the major building and infrastructure projects in both Malaysia and across South East Asia during her years as a construction lawyer, she regularly sits as an arbitrator and adjudicator, and is a sought after resource by industry stakeholders.

Can you briefly outline your work at Essex Chambers?

I work as an arbitrator, adjudicator, mediator and in other third-party neutral roles. This means that I am not acting for any of the parties in dispute, but instead sit in the middle as a neutral party, to assist the disputing parties to achieve resolution. How that resolution is achieved will depend on the third party neutral role I am appointed to. For example, as an arbitrator, I will mainly be hearing arguments from each party and making an independent decision on right and wrong. Whereas as a mediator, I will be more involved with each of the parties to try to help each understand the other’s position and to find a compromise solution acceptable to both parties as settlement.

What are some of the issues facing the construction sector in Malaysia?

Education and enforcement would be my main picks, and they are related. Laws and regulations are aplenty, but of limited use unless they are understood, applied and enforced. Education and enforcement would go a long way to changing the mindset of everyone in the construction sector and lead to a higher standard of operations all round. There is no doubt this will take time, but we must start. There is also the trinity of time, cost and quality which will see higher standards, with more efficiency and much better cashflow. This will also raise the standard of living for those working in the construction sector.

Why is the Asian International Arbitration Centre’s (AIAC) standard form contract (SFC) initiative so important to Malaysia?

The AIAC is a body that is independent of any one profession in the construction sector. It does not promote any particular profession, as can be seen by the provision that the Contract Administrator is not confined to any one profession and, therefore, there can be a “horses for courses” flexibility. Even though the AIAC may be seen as the purview of lawyers, that is also not completely accurate since there are many non-lawyer arbitrators, and the parties using AIAC services are the industry players themselves including developers and contractors, sub-contractors and suppliers. In fact the rationale behind the AIAC SFC is dispute avoidance. Such wider aspect initiative and education will contribute significantly to the overall education of the construction sector towards the adoption of higher rationale of dispute avoidance and being non-partisan. There is intention is to educate the construction sector about the SFC and this will include education on contract administration as a whole; the role of each party in the construction contract, as well as the expectations and obligations.

Can you briefly explain from a legal perspective how AIAIC SFC sits as compared to other main standard forms in Malaysia?

Generally, the AIAC SFC is more comprehensive when compared to most standard forms in Malaysia, and especially so compared to the Public Works Dept standard forms. Its philosophy accords with the CIDB 2000 standard form which I was very involved with, but which did not gain popularity. In hindsight, it would appear that we were ahead of our times! However, the intervening 18 years has seen a significant shift towards including more procedure, timelines and particularly more detail as to how the contract administrator is to discharge their duties. This we see in several standard forms not least FIDIC 2017, PAM 2018 and AIAC SFC.

What do you believe is the professionals' role and obligations under standard forms generally (not just AIAIC SFC)?

The professionals' role and obligations is exactly that – to be professional, to undertake the roles and obligations they have been tasked with, and to discharge those roles and obligations as intended. The problem that we have experienced is that all too often there is insufficient time and effort put into the discharge of the roles. There may be many reasons for this, but regardless of the reasons, the end result is that the roles and obligations are not properly discharged, which leads to disputes and the need for dispute resolution procedures which is additional time and money.

In terms of design, there needs to be design co-ordination and thought with regard to details and connections. Instead, often the co-ordination and detailed design is left to the contractor under the guise of shop drawings and site co-ordination. The contractor may well have those duties, but where is that line between the duties of the professional and that of the contractor? It seems to me that the line has been shifted along the way, putting more on the contractor.

As for contract administration (CA), it is quite common that money talks – so the CA may tend to favour the paymaster/developer. Professionals are often heard saying things such as "no choice", but in life there is almost always a choice even when those choices are extremely difficult. As a result, we see projects – big and small – where designs are not fully developed, when the contract is left so that the contractor has to detail the schematics and figure out the connections; and where design co-ordination is ad-hoc requiring the contractor to raise RFIs. By the same token, there are many contractors out there who don’t have a good grasp of what they are doing, let alone what they are supposed to do.

What role do organisations such as CABE have in helping to improve professional standards across the industry?

Education, education, education. To provide professionals with technical skills is a given but also to instil the sense of duty and the ability to withstand the onslaught of the paymaster's demands. A trend which seems to be growing evermore is the squeezing down of professional fees against a backdrop of increasing costs and lower human efficiency, which results in chaotic delivery of projects as well as design and contract administration issues. The main beneficiaries are lawyers and the players in the dispute resolution industry. But that is a contradiction in terms – we are in the construction industry; we are in the business of building, not disputing, and yet that is today’s reality.

Chartered Association of Building Engineers (CABE) fully supports the two contract publications, produced by the AIAC (Asian International Arbitration Centre (Malaysia)). The publications – The Standard Form of Building Contracts, Main Contract and Sub-Contract (AIAC 2019 SFC) – provide comprehensive and unified contract templates that help to eliminate contract dispute by providing clear and unbiased standardisation.

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