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28/08/2026

CIPAA 2012: Court of Appeal Clarifies When an Adjudication Decision Ceases to Be Binding

28/08/2026
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CIPAA 2012: Court of Appeal Clarifies When an Adjudication Decision Ceases to Be Binding

YS Chong Enterprise Sdn Bhd (In Liquidation) v Perkasa Jauhari Sdn Bhd (In Liquidation)

[Court of Appeal Civil Appeal Nos. J-02(NCC)(A)-464-03/2025 & J-02(IM)(NCC)-465-03/2025]

Issues

An adjudication decision under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”) may be relied upon for enforcement and, where payment remains outstanding, as the basis for winding-up proceedings. But what happens if the underlying dispute is subsequently determined by the court in the opposite way? Does an earlier winding-up order obtained on the basis of the enforced adjudication decision preserve the adjudicated debt? The Court of Appeal recently considered these issues in YS Chong Enterprise Sdn Bhd (In Liquidation) v Perkasa Jauhari Sdn Bhd (In Liquidation) and provided important guidance on the temporary finality of adjudication decisions, enforcement under section 28 of CIPAA 2012 and winding-up proceedings.

Brief Facts

The brief facts of the case are as follows:-
  1. YS Chong Enterprise Sdn Bhd (“YS Chong”) was engaged by Perkasa Jauhari Sdn Bhd (“Perkasa”) as a subcontractor for works relating to the MRT Sungai Buloh–Kajang project.
  2. A payment dispute subsequently arose. YS Chong commenced adjudication proceedings on 15 March 2018.
  3. While the adjudication was pending, on 13 April 2018, Perkasa commenced proceedings in the High Court concerning substantially the same underlying payment dispute (“JBHC Suit”).
  4. On 1 August 2018, before the JBHC Suit was determined, YS Chong obtained an adjudication decision in its favour (“Adjudication Decision”). On 21 November 2018, YS Chong obtained an order under section 28 of CIPAA to enforce the Adjudication Decision as if it were a judgment of the High Court (“Enforcement Order”).
  5. YS Chong then relied on the Enforcement Order to present a winding-up petition against Perkasa. A winding-up order was made against Perkasa on 5 August 2019 (“YS Chong Winding-Up Order”). Perkasa appealed but subsequently withdrew its appeal on 2 March 2021.
  6. Meanwhile, the JBHC Suit concerning substantially the same underlying payment dispute continued. Following a full trial, the High Court decided the dispute in Perkasa’s favour on 21 July 2020, allowing Perkasa’s claim and dismissing YS Chong’s counterclaim (“JBHC Judgment”). YS Chong appealed against the whole of the JBHC Judgment.
  7. The Court of Appeal subsequently struck out the appeal insofar as it concerned the dismissal of YS Chong’s counterclaim, on the basis that leave of the winding-up court had not been obtained to continue that part of the proceedings. YS Chong’s application for leave to appeal to the Federal Court against the striking-out order was dismissed on 13 September 2021.
  8. The remaining appeal, concerning Perkasa’s claim, proceeded before the Court of Appeal and was dismissed on 30 March 2022. YS Chong subsequently sought leave to appeal to the Federal Court against that decision but withdrew its application on 31 October 2022.
  9. Perkasa subsequently relied upon the sums due under the JBHC Judgment to present a winding-up petition against YS Chong.
  10. YS Chong resisted the petition on the basis that the earlier Adjudication Decision and Enforcement Order had never been set aside and continued to constitute a subsisting debt which could be set off against Perkasa’s judgment debt.
  11. YS Chong further contended that the earlier YS Chong Winding-Up Order had crystallised the adjudicated debt such that it could no longer be challenged, relying on the doctrines of res judicata and issue estoppel.
  12. On 11 March 2025, the High Court allowed Perkasa’s winding-up petition and ordered YS Chong to be wound up. YS Chong appealed to the Court of Appeal.

Issues before the Court of Appeal

Central to the issues before the Court of Appeal was the “temporary finality” of an adjudication decision:
“1. … An adjudication decision is binding at once, even if it is later reversed by a court or arbitral tribunal. This quality — commonly described as the “temporary finality” of an adjudication decision — is both the genius and the inherent limitation of the CIPAA regime. It is the inherent limitation which is at the heart of these appeals.”
The appeals concerned the limits of that temporary finality and what follows when the underlying dispute is “finally decided” under section 13(c) of CIPAA 2012. Against this backdrop, the Court considered the following questions:
  1. When is a dispute “finally decided by arbitration or the court” under section 13(c) of CIPAA 2012? Upon the first final decision on the merits, or only after all avenues of appeal have been exhausted?
  2. What happens to an adjudication decision and a section 28 enforcement order when the underlying dispute is subsequently “finally decided” by the court in the opposite way?
  3. Does an earlier winding-up order obtained on the basis of the enforced adjudication decision preserve the adjudicated debt, notwithstanding the subsequent final determination?

The Court of Appeal’s Decision “Finally Decided” Means A Final Decision On The Merits

Section 13 of CIPAA 2012 provides that an adjudication decision is binding unless:
  1. it is set aside by the High Court under section 15;
  2. the subject matter is settled by agreement in writing between the parties; or
  3. the dispute is finally decided by arbitration or the court.

Section 28 of CIPAA 2012, in turn, permits a party to apply to the High Court to enforce an adjudication decision “as if it is a judgment or order of the High Court”. The Court of Appeal considered whether a dispute is “finally decided” under section 13(c) of CIPAA 2012 only after all avenues of appeal have been exhausted, or upon the court of first instance delivering a final decision on the merits. The Court preferred the latter interpretation. The Court held that the ordinary meaning of “finally decided” refers to a final decision on the merits, rather than a decision which has become incapable of further appeal. In distinguishing the two concepts, the Court explained:

“30.…”The dispute is finally decided by the court” is not the same proposition as “the dispute is decided by the court with finality”, in the sense of unappealable finality. The former describes what the court has done as in rendering a final decision on the merits, whilst the latter describes the subsequent legal status of what was done in that the decision is no longer open to challenge. In our view, section 13(c) is concerned with the former.”

The Court further explained that once the court or arbitral tribunal has pronounced on the merits of the dispute, “the function that the adjudication decision’s temporary finality was designed to serve has been fulfilled, and the bridge has been crossed.” Accordingly, the JBHC Judgment delivered on 21 July 2020 constituted the final determination of the underlying dispute for the purposes of section 13(c) of CIPAA 2012, without the need to await the outcome of the subsequent appellate proceedings.

A Section 28 Order Remains Indisputable While It Subsists, But Does Not Survive A Final Determination

The Court held that the Enforcement Order did not constitute an independent judgment debt capable of surviving a subsequent final determination of the underlying dispute. Rather, its continued effect was dependent upon the Adjudication Decision remaining binding:  
“36. …Once the Adjudication Decision ceased to be binding by virtue of the Final Determination under s. 13(c), the statutory predicate for the s. 28 judgment fell away, and the effect of the Enforcement Order as “a judgment” of the High Court for the purposes of s. 28(3) was correspondingly extinguished. The Enforcement Order does not survive as an independent judgment debt divorced from the Adjudication Decision which it merely enforced. In other words, its juridical life is parasitic upon, and coextensive with, the binding force of the Adjudication Decision under s. 13.”
Accordingly, once the High Court finally determined the underlying dispute in Perkasa’s favour, the Adjudication Decision ceased to be binding and the judgment effect of the Enforcement Order was correspondingly extinguished. There was therefore no subsisting debt owing by Perkasa to YS Chong which could be relied upon as a set-off.   In considering the status of the Enforcement Order, the Court of Appeal also addressed the differing approaches taken by the High Court on the indisputability of a judgment entered under section 28 of CIPAA 2012 in the following cases:  
  1. ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd (ASM Development) [read our update on the case here], which considered the distinction between a judgment entered under section 28 of CIPAA 2012 based on an adjudication decision and a judgment entered under section 38(1) of the Arbitration Act 2005 based on an arbitral award; and
  2. Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd (“Maju Holdings”) [read our update on the case here], which departed from ASM Development.
The Court adopted the approach in Maju Holdings and held that there is no distinction between a judgment entered under section 28 of CIPAA 2012 and a judgment entered under section 38(1) of the Arbitration Act 2005 insofar as the indisputability of the debt is concerned. While a section 28 judgment subsists, it is an indisputable judgment debt for the purposes of both execution and winding-up:
“45. We respectfully adopt that reasoning, and apply it to the present case. It follows that there is, in truth, no distinction between a judgment entered under s. 28(1) of CIPAA and one entered under s. 38(1) of the Arbitration Act 2005 as to the indisputability of the debt which each represents. Both are, for so long as they subsist, judgments of the High Court in the full sense for the purposes of execution, of s. 466(1)(a) of the CA 2016, and of any winding-up petition founded upon them; neither can be treated as an undisputed debt for one purpose and a disputed debt for the other.
46. The only distinction… is… that a judgment entered under s. 28 of CIPAA is, by reason of s. 13 of CIPAA, liable to extinguishment upon a Final Determination of the underlying dispute by the court or by arbitration within the meaning of s. 13(c). It is a vulnerability built into CIPAA’s scheme of “temporary finality”, which has no counterpart in the Arbitration Act 2005.”
The Court nevertheless clarified that the extinguishment operated prospectively. Acts undertaken and orders made while the Enforcement Order remained in force, including the earlier YS Chong Winding-Up Order against Perkasa, were not retrospectively invalidated by the subsequent final determination.

An Earlier Winding-Up Order Does Not Preserve the Adjudicated Debt

YS Chong argued that the earlier YS Chong Winding-Up Order against Perkasa had effectively crystallised the adjudicated debt. Since the Winding Up Court had acted upon that debt, YS Chong contended that the debt could no longer be challenged and was protected by res judicata or issue estoppel.
The Court of Appeal rejected this argument and explained:
“39. …A winding-up order… is not an adjudication on the merits of the underlying debt in the sense required to found res judicata (cause of action estoppel) or issue estoppel. The function of the winding-up court… is to determine whether the statutory preconditions to winding-up, namely, a valid demand, the requisite sum, and the company’s deemed or actual inability to pay, are satisfied, and whether any genuine, substantial dispute as to the debt has been raised. It is not the function of the winding-up court to try, or finally determine, the merits of the underlying dispute giving rise to the debt.”
The Court further explained that the earlier YS Chong Winding-Up Order determined only that, at the relevant time, Perkasa had failed to satisfy a statutory demand founded on the then-extant Adjudication Decision and Enforcement Order. It was “not, and could not have been, an adjudication of the merits of the underlying payment dispute between YS Chong and Perkasa”. Accordingly, the winding-up order did not give rise to any res judicata or issue estoppel in respect of the validity, finality or continued binding effect of the Adjudication Decision.   Accordingly, the earlier YS Chong Winding-Up Order did not insulate the adjudication decision from the subsequent operation of section 13(c) of CIPAA 2012. The adjudicated debt therefore ceased to subsist following the final determination of the underlying dispute, notwithstanding that the earlier YS Chong Winding-Up Order had been obtained on the basis of the Adjudication Decision and Enforcement Order.   For completeness, the Court of Appeal also held that Perkasa’s withdrawal of its appeal against the YS Chong Winding-Up Order on 2 March 2021 was of no consequence. By then, the Adjudication Decision had already ceased to be binding, as the underlying dispute had been finally determined by the JBHC Judgment delivered on 21 July 2020.

Key Takeaways

The key takeaways from the Court of Appeal’s decision are as follows:-

  1. A first-instance final judgment is sufficient to engage section 13(c) of CIPAA 2012. A dispute is “finally decided” when the court delivers a final decision on the merits. It is unnecessary to wait until all avenues of appeal have been exhausted.
  2. A section 28 judgment is indisputable while it subsists but remains subject to section 13(c) of CIPAA 2012. Enforcement under section 28 does not convert temporary finality into permanent finality. Once the underlying dispute is finally decided, the adjudication decision ceases to bind and the judgment effect of the section 28 enforcement order is correspondingly extinguished.
  3. An earlier winding-up order does not preserve the adjudicated debt. A winding-up order obtained on the basis of a section 28 enforcement order does not finally determine the merits of the underlying payment dispute and therefore does not prevent the subsequent operation of section 13(c) of CIPAA 2012.
ABOUT THE AUTHOR
Andrew Heng Yeng Hoe
ANDREW HENG YENG HOE

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