Building and Construction Industry Security of Payment Act 2004

18.1 Construction adjudication was introduced into Singapore by Parliament’s enactment of the Building and Construction Industry Security of Payment Act 2004 (the SOPA) [Appendix 19.1].² The SOPA was introduced in 2004, when the construction industry in Singapore was “going through a difficult time”3 and payments to “subcontractors and suppliers further downstream” were being withheld, or delayed, causing the “downstream” subcontractors and suppliers severe financial problems, crippling them and leading them into insolvency.

18.2 The intention of the SOPA was to ensure a smooth cash flow⁴ across the country and to provide a quick and effective (albeit, temporary) remedy to “downstream” contractors and suppliers in the construction industry. In effect, the SOPA assimilated the merits of the Latham Report’s recommendations into Singapore, in particular, (1) a contractor’s entitlement to progress payment for construction works carried out under a construction contract, and (2) the provision of a “fast and low cost adjudication system”, with temporary binding and enforceable effect.⁵

18.3 The SOPA regulates both progress claims under a “construction contract” and claims under a “supply contract” for construction works in Singapore.⁶ A construction contract is defined widely under the SOPA⁷ and includes both a contract where one party undertakes to carry out construction works (whether including the supply of goods or services) and where a party agrees to supply goods for construction works (“supply contract”). A “supply contract” is defined as an agreement where one party undertakes to only supply goods to another party that is engaged in the business of carrying out construction works and for the purpose of construction work.⁸

18.4 The SOPA is modelled upon the New South Wales, legislation9 in Australia, but there are significant differences.¹⁰ The Act applies to any construction contract, as set out under section 2 thereof, which is made in writing, whether, or not, the contract is expressed to be governed by the law of Singapore.¹¹ The contract shall be treated as being made in writing if:

• It is contained in writing, whether, or not, it is signed by the parties thereto;
  
• It is made by an exchange of communications in writing;
  
• It is made otherwise than in writing and is recorded by one of the parties thereto, or by a third party, with authority of the parties thereto; or
  
• The parties to the contract agree otherwise than in writing by reference to terms which are in writing.12

18.5 Where a contract is not wholly made in writing, the contract shall be treated as being made in writing if the matter in dispute between the parties thereto is in writing.¹³ The existence of a valid construction contract is essential for the claimant to rely on and invoke his right, including commencement of any adjudication application, under the SOPA. In Admin Construction Pte Limited v Vivaldi (S) Pte Limited,¹⁴ the Singapore High Court held, inter alia, in setting aside an adjudication determination, that a settlement agreement extinguished and cancelled all rights under a construction contract, the claimant had no right to commence any adjudication application under the SOPA and the adjudicator had no jurisdiction to make any adjudication determination because no construction contract existed under the SOPA from the date on which the settlement was reached and prior to the claimant commencing the adjudication application.

18.6 The SOPA entitles a party, who has carried out construction works, and/or supplied goods for construction works, to enforce his entitlement under it and to invoke the “fast and low cost adjudication system” for the dispute of payment arising out of the construction contract at any time. The parties may even do so where actions have already commenced in a Singapore court, arbitration, or any other “dispute resolution proceeding”, subject only to the condition that the adjudication proceedings must be terminated, if “the dispute is determined by a court or tribunal, or at any other dispute resolution proceeding”¹⁵ before the adjudicator has rendered his own decision.

Construction adjudication process

18.7 The SOPA expressly abrogates the rather controversial common law concept of “argue now, pay later” and replaces it with the principle of “pay now, argue later”,¹⁶ by providing a statutory right to entitle a person, who had carried out construction work, or supplied any goods or services, to make a progress/payment claim.¹⁷ A party executing construction works, or having supplied goods for construction works, is entitled to serve one18 “payment claim”¹⁹ for the month of work within the period that is stipulated in the construction contract. If there is no such provision “such time as may be prescribed”, then the party should serve the claim “by the last day of each month following the month in which the contract is made”.20 The party making the payment claim is the claimant. The claimant is entitled to make a payment claim with the details prescribed by the SOPA²¹ for all works and costs arising out of, under and in accordance with the construction contract. This includes progress and final claims,22 prolongation and preliminary costs for delayed works,²³ claim for part and/or full retention,²⁴ withheld under the terms of the contract and due to the claimant for all works carried out, and costs incurred in the process and for all outstanding retention monies, if the contract is fully completed, terminated, or repudiated.²⁵ Pure damages for breach of contract (ie loss of profit)26 are excluded. The service²⁷ of a valid payment claim on the party “liable to make a progress payment”, the respondent (see s 2 of the SOPA), triggers the adjudication process in Singapore under the Act.²⁸

18.8 Upon the due service of a valid payment claim,29 the respondent is mandated to serve a valid “payment response”³⁰ upon the claimant, in accordance with the date specified in the construction contract (maximum of 21 days). If no date is specified in the construction contract, the payment response must be served “within seven [7] days”³¹ from the receipt of service of the payment claim. The payment response must contain the mandatory details prescribed by the SOPA.32 The respondent is mandated³³ to “give in full his reasons for withholding payment of any amount specified in the payment claim and his calculations in support of those reasons”.³⁴ A failure to do so results in a number of draconian35 consequences for the respondent: (1) They are automatically deemed to have conceded “to an adjudication order on the Payment Claim”; (2) “[they] will not be able to rely on any additional ground before the adjudicator”;³⁶ and (3) the adjudicator does not have the “jurisdiction”, and is precluded from considering, any reason not contained in the payment response.³⁷ In Singapore, it is therefore imperative that the respondent, who is served with a payment claim, must serve his valid payment response upon the claimant within the prescribed time-lines.³⁸ The respondent is entitled to raise “any reason for withholding any amount including, but not limited to, any cross-claim, counterclaim and set-off”³⁹ in his payment response to dispute the amount claimed in the payment claim, provided such “reasons” are limited to those arising from the same construction contract upon which the payment claim is based.⁴⁰

18.9 The service of a valid payment response and the expiry of the “period within which the payment response is required to be provided under [section] 11(1)”41 has the following important consequences on the claimants under the SOPA:⁴²

1. It triggers a statutory “dispute settlement period”⁴³ of seven days during which the claimant can seek clarification from the respondent on the payment response and negotiate to settle the payment claim dispute,⁴⁴ and the respondent is allowed to serve a payment response upon the claimant; if they had not done so earlier, as required under section 11(1) of the SOPA.⁴⁵
   
2. It triggers the claimant’s entitlement to commence an adjudication application⁴⁶ under section 13(1) of the SOPA if the claimant fails to “receive” the “payment by the due date of the response amount which he has accepted”,⁴⁷ or where the claimant disputes the payment response provided, or when the respondent fails to provide a payment response within the statutory required period.⁴⁸

18.10 Upon the expiry of the statutory dispute settlement period of seven days, or upon the respondent’s failure to make payment of the accepted payment response within the due date, the claimant is entitled49 to “make an adjudication application” with the “authorised nominating body”,⁵⁰ subject to compliance with the following conditions:

1. The claimant serves upon the respondent “a notice in writing, containing the prescribed particulars” before the filing of the adjudication application with the nominated body, notifying the “[r]espondent of its intention to apply for adjudication of the payment claim dispute”;51
   
2. The claimant makes the adjudication application to the SMC within seven days⁵² after the claimant’s “entitlement arises under section 12”⁵³ of the statute;
   
3. The claimant’s application is made “in writing addressed to the authorised nominated body,54 requesting it to appoint an adjudicator”. It must “contain such information, or be accompanied by such documents as may be prescribed”.⁵⁵ Unlike with the payment claim, the claimant is allowed to apply to the appointed adjudicator to amend the adjudication application;56
   
4. The claimant’s application shall be “accompanied by such application fees as may be determined by the authorised nominating body”⁵⁷ and the application is “accompanied by such other information, or documents (including expert reports, photographs, correspondences and submissions) as the claimant may consider to be relevant to the application”.⁵⁸

18.11 The nominating body (the SMC), upon receipt of the adjudication application and “application fees” (including the prescribed “initial adjudicator’s fees”) in accordance with sections 13(3)(a)–(e) of the SOPA, assigns an adjudication application number to the application. It is further mandated59 to:

1. Serve a copy of the claimant’s adjudication application upon the respondent;⁶⁰
   
2. Serve upon the “principal (if known) and upon the owner concerned a notice in writing that the application has been made”;⁶¹
   
3. Appoint an adjudicator⁶² within seven days, whom the SMC considers “to be appropriate for the appointment as the adjudicator to determine the adjudication application”; and
   
4. Give notice of the appointment of the adjudicator to the claimant, the respondent and the principal.⁶³

18.12 The claimant is entitled to withdraw his adjudication application “at any time”, by serving a notice of withdrawal upon the adjudicator, the authorised nominating body and the respondent.⁶⁴

18.13 The respondent is required65 to file his adjudication response to the claimant’s adjudication application with the SMC within seven days from the date of receipt of the adjudication application from the SMC. The required form and contents of the adjudication response is prescribed under the SOPA.⁶⁶ As in the case of the adjudication application, but subject to the mandatory requirement of section 15(3) of the SOPA, the respondent is allowed to apply to the appointed adjudicator to amend the adjudication response.⁶⁷ However, the draconian provision of section 15(3) of the statute precludes the respondent from raising, and the adjudicator from considering, “any reason for withholding any amount, including, but not limited to any cross-claim, counterclaim and set-off” in the adjudication response, “unless” the reasons are in the “payment response” (for construction contracts), or when such reasons were given “within the relevant due date” (for supply contract).⁶⁸ The adjudicator is also bound to reject any “adjudication response [which] is not lodged within” the prescribed period.⁶⁹

Commencement of statutory adjudication and adjudication procedures

18.14 Statutory adjudication under the SOPA commences “immediately upon the expiry of period” for the respondent to file his adjudication response.⁷⁰

The rôle of the adjudicator

18.15 The rôle of the adjudicator in Singapore is set out clearly in the SOPA.⁷¹ However, the Singapore Court of Appeal, in its first and seminal decision relating to construction adjudication, Chua Say En g,⁷² set out the important restrictions upon the rôle of the adjudicator in emphatic terms:

1. The adjudicator is “not competent to decide whether [they were] validly appointed to adjudicate the matter”.⁷³ The court held that the issues relating to the validity of the payment, and/or payment response, were jurisdictional issues that went to the validity of the appointment of the adjudicator. As such, the court held that the adjudicator was, under the SOPA, not competent to decide on the validity of his own appointment. The Court of Appeal decided that, as the validity (and due service thereof) of the payment claim and payment response affected the jurisdiction and validity of the adjudicator’s appointment under the SOPA, only the High Court of Singapore was competent and had jurisdiction to decide their validity;
   
2. The Court of Appeal held that the “function of an adjudicator” was only to decide “(a) whether the adjudication application in question is made in accordance with sections 13(3) (a)–(c) of the Act”.⁷⁴ “If the adjudication application complies with sections 13(a) – (c) thereof, the adjudicator should proceed with the adjudication.” In the premises, the rôle of the adjudicator in Singapore is only to decide if the adjudication application:
   
   
   
   • 3.1 Is taken within the mandated seven days after the entitlement first arose: see section 13(3)(a) of the SOPA;
     
   • 3.2 Is made in writing addressed to the SMC requesting the appointment of an adjudicator: see section 13(3)(b) SOPA; or
     
   • 3.3 Contains such information or accompanied by such documents as may be prescribed”: see section 13(3)(c) SOPA and to proceed to determine the adjudication application if it complied with the sections 13(a)–(c) SOPA conditions.
   
   

The Court of Appeal held that, if the adjudication application did not comply with the mandated requirements of section 13(3)(a)–(c) of the SOPA, then the adjudicator is bound to reject the adjudication application75 under section 16(2)(a) thereof.

18.16 Furthermore, in a more recent Singapore Court of Appeal decision in WY Steel Construction Pte Limited v Osko Pte Limited,⁷⁶ the court also considered the rôle of the adjudicator in relation to an adjudication application, in the event that the respondent failed to serve the mandated payment response, as set out under section 15(3) of the SOPA, and laid down the following important principles:

1. The prohibition in section 15(3) of the Act⁷⁷ was “jurisdictional in the sense that it curtails the power of an adjudicator to allow a respondent to raise new grounds for withholding payment that were not included in his payment response and, for that matter, an adjudicator’s power even to consider such grounds at all”.⁷⁸ As such, the rôle of the adjudicator, in determining the defence to the claimant’s payment claim, is strictly restricted to any such reason, or defence, raised in full in the payment response: see section 11(1) of the SOPA;
   
2. However, even in a case where the respondent has not served a payment response, the respondent is still entitled to raise, and the adjudicator is bound to consider, any “material which is properly before him and which he is permitted and, indeed, obliged to consider”: see section 17(3) thereof. The respondent is not precluded from raising and the adjudicator is bound to consider, “patent errors on the face of the material properly before the adjudicator to contend that the payment claim should not be allowed in part, or at all”;⁷⁹
   
3. In all cases, including a case where the respondent has not served his payment response, as mandated under section 11(1) of the SOPA, the adjudicator is “bound to consider the payment claim before [them] and cannot make [their] determination as if the fact that the response has not filed a response obviates the need for [them] to consider the material properly before him”;80
   
4. In all cases, the adjudicator, “having regard only to matters which [they] can properly consider and not those which [they] cannot, must, in a timely manner, come to [their] own independent and impartial view of the payment claim”.⁸¹

The duties of the adjudicator

18.17 The adjudicator’s duties are expressly prescribed by the statute,⁸² as follows:

1. The adjudicator is bound to reject the adjudication application if it fails to comply with the mandatory requirement of sections 13(a)–(c) of the SOPA;⁸³
   
2. The adjudicator is also bound to reject the adjudication response if it is not lodged within the prescribed period.⁸⁴

18.18 The adjudicator is bound⁸⁵ to discharge his duties of determining the merits of the adjudication application:

1. Independently, impartially and in a timely manner;86
   
2. Avoid unnecessary expense,⁸⁷ and
   
3. Comply with the principles of natural justice.⁸⁸

18.19 In considering the merits of the adjudication application, the adjudicator dispenses a “rough and ready type of justice”,89 but is duty bound⁹⁰ to consider the following:

1. The provisions of the SOPA;
   
2. The provisions of the construction contract to which the adjudication application relates;
   
3. The payment claim to which the adjudication application relates, the adjudication application and the accompanying documents thereto;
   
4. The payment response to which the adjudication application relates (if any), the adjudication response (if any) and the accompanying documents thereto;
   
5. The results of any inspection carried out by the adjudicator of any matter to which the adjudication relates;
   
6. The report of any expert appointed to inquire on specific issues;
   
7. The submission and responses of the parties to the adjudication and any other information or document provided at the request of the adjudicator in relation to the adjudication, and
   
8. Any other subject-matter that the adjudicator reasonably considers to be relevant to the adjudication.⁹¹

The powers of the adjudicator and the conduct of the adjudication proceedings

18.20 In Singapore, the adjudicator, once appointed by the SMC, is given wide statutory powers⁹² in order to carry out their statutory duty to consider the merits of the claimant’s adjudication application and to make an enforceable determination in writing. They are the “master of the proceedings” and can conduct the adjudication in the manner which they deem fit, so long as they comply with the SOPA, act with impartiality and give both parties a fair hearing.⁹³ The parties are bound to “comply with any requirement made, or direction issued, by the adjudicator”.⁹⁴ The adjudicator’s power is, however, subject to their lack of jurisdiction and power to consider the validity of the payment claim, the validity of the payment response and the validity of his appointment.⁹⁵

18.21 The adjudicator takes control of the adjudication process upon their appointment and the SOPA grants the adjudicator wide powers to enable them to carry out their duties with the objective of the Act and to render an enforceable adjudication determination within the strict time-lines set out in the SOPA with the objective to provide “fast and low costs adjudication system”.

18.22 The adjudicator is granted the powers96 to:

1. Conduct the adjudication in such manner as they think fit;
   
2. Require submissions,⁹⁷ or documents, from any party to the adjudication;
   
3. Set deadlines for the submissions, or documents, to be provided by any party and for the submissions, or responses thereto, by any other party;
   
4. Appoint, after notifying the parties, an independent expert to inquire and report on specific issues relevant to the adjudication;
   
5. Call a conference of the parties;⁹⁸
   
6. Carry out an inspection of any construction work, construction site, goods, or any other matters, to which the adjudication relates;
   
7. Issue such directions as may be necessary, or expedient, for the conduct of the adjudication.⁹⁹

18.23 In practice, the adjudicator will invariably, upon their appointment, confirm their appointment with the parties, confirm the scheduled date at which the adjudication determination is to be completed, appoint an early date for the parties and their representatives to attend before them for a hearing on the merits of the adjudication conferences, hear parties on the merits of the adjudication application, discuss with the parties on the need of an extension of time, if required, request for any such extension at the conference and record the parties’ consent or lack of consent.

18.24 The SOPA mandates100 that “all statements, or documents, created, or made, for the purpose of an adjudication” must be “confidential”. There are important exceptions to the rule of “confidentiality”,¹⁰¹ particularly when such information is required for proceedings before a court, or tribunal, when the matter is proceeding, or intended to proceed, for final determination.¹⁰²

The adjudication determination process

18.25 The adjudicator is bound¹⁰³ to determine the adjudication application within seven days¹⁰⁴ after the commencement of the adjudication, if the adjudication relates to a construction contract, and the respondent either has failed to serve a payment response and lodge an adjudication response,105 or has failed to pay the response amount that was accepted by the claimant by the due date.¹⁰⁶

18.26 In all other cases, the adjudicator is bound to determine the adjudication application within 14 days, or within such period as may be requested by the adjudicator and agreed by the claimant and the respondent.¹⁰⁷

18.27 The adjudicator is bound¹⁰⁸ to determine the amount (if any) to be paid by the respondent to the claimant,¹⁰⁹ the date when the adjudicated amount is payable,¹¹⁰ the interest payable on the adjudication amount111 and the “portion of the costs of the adjudication payable by each party to the adjudication”.¹¹²

18.28 The adjudicator (and the SMC¹¹³) is afforded statutory “protection from liability”¹¹⁴ with respect “to anything done, or omitted to be done, in good faith in the discharge, or purported discharge, of his functions or duties under the Act”.

The adjudication determination

18.29 A valid adjudication determination under the SOPA must comply with the following conditions.¹¹⁵ The determination must:

1. Be made within and in accordance with the strict time-lines set out in sections 17(1)(a) and (b) of the SOPA;116
   
2. Be in writing;¹¹⁷
   
3. Contain all reasons for the determination;¹¹⁸ and
   
4. Be a final determination, which cannot be amended by the adjudicator, save for minor “clerical mistake”, “accidental slip or omission”, or “a defect in form”.¹¹⁹

Adjudication review process and determination

18.30 Unlike other construction adjudication régimes, such as England, Australia, New Zealand and recently, Malaysia, Singapore has a “unique”¹²⁰ procedure for respondents¹²¹ to apply for a review of the merits of the adjudicator’s determination.

18.31 The rôle and functions of the review process were succinctly set out by the Singapore High Court in SEF Construction Pte Limited v Skoy Connected Pte Limited:122

18.32 The following mandatory conditions¹²⁵ must be fulfilled before the adjudication review procedure can be invoked by the respondent:

1. Only the respondent is entitled to apply for the adjudication review;¹²⁶
   
2. The respondent is only allowed to exercise the right to review if they have filed a payment response;¹²⁷
   
3. The right to apply for review can only be exercised if the adjudicated amount exceeded the amount in the payment response (if any) by the “prescribed amount”, currently at S$100,000;128
   
4. The respondent must lodge the adjudication review application in the prescribed form, with the prescribed details¹²⁹ together with the prescribed review application fees¹³⁰ with the SMC within seven days¹³¹ from the date of the service of the adjudication determination by SMC on the respondent;
   
5. Prior to being entitled to apply for the adjudication review application, the respondent is mandated to pay to the claimant the adjudicated amount – which is being reviewed, failing which the respondent is not allowed to lodge their adjudication review.¹³²

18.33 The SMC is required,¹³³ within seven days of the respondent filing their adjudication review application, to serve a copy of the adjudication review application upon the claimant, serve “a notice in writing” of the application upon the principal and/or owner of the project134 and to appoint “a review adjudicator, or a panel of [three] review adjudicators”,¹³⁵ to determine the respondent’s review application.

18.34 The review tribunal process is as follows:

1. Within seven days after receipt of the adjudication review application from the respondent, the SMC is required to appoint a review adjudicator, or panel of review adjudicators, and to give notice in writing of the appointment to the parties, the principal and/or owner concerned of the project;¹³⁶
   
2. The adjudication review commences “on the date immediately after” the SMC’s service of the notice in writing on the parties, the principle (if known) and the owner of the appointment of the review adjudicator, or the panel of review adjudicators;¹³⁷
   
3. The review adjudicator, or review panel, is bound to reject the review application if:¹³⁸
   
   
   
   • 3.1 The respondent fails to file the review application within seven days from the date on which the adjudication determination was served by the SMC upon the respondent;¹³⁹
     
   • 3.2 If the adjudication review application does not comply with the mandatory requirements, ie to be in writing, addressed to the SMC, “requesting the appointment of one, or more, review adjudicators to determine the application”,¹⁴⁰ and does not contain the prescribed information,¹⁴¹ or the prescribed fees.¹⁴²
   
   

18.35 The review adjudicator, or the review tribunal, must determine the adjudication review application “within 14 days after the commencement of the adjudication review, or within such longer period as may have been requested by the review adjudicator, or the panel of review adjudicators, as the case may be, and agreed to by the claimant and the respondent”.143

18.36 The review adjudicator, or review panel, will hear full arguments from the parties on the whole merits of the original adjudication determination¹⁴⁴ and adjudicated amount. They have full discretion and power to¹⁴⁵ “substitute”¹⁴⁶ the adjudication determination, which is the subject to the adjudication review, for any other determination as is considered “appropriate”, or to refuse the adjudication review application.¹⁴⁷

18.37 The review adjudicator, or the review panel,¹⁴⁸ is bound to determine the adjudicated amount¹⁴⁹ (if any) to be paid by the respondent to the claimant, if the amount determined under the review is “different”¹⁵⁰ from the adjudicated amount in the adjudication determination that is subject to review, “the date on which the difference in amount is payable”, the interest payable on any such amount151 and the proportion of costs of the adjudication review payable by each party to the adjudication review.¹⁵²

18.38 As in the case of the original adjudication determination,¹⁵³ a valid, reviewed adjudication determination under the SOPA must be made in accordance with the strict time-lines set out in section 19(3), must be in writing,¹⁵⁴ must contain all reasons for the determination¹⁵⁵ and must constitute a final determination,¹⁵⁶ which cannot be amended by the adjudicator, save for minor “clerical mistake”, “accidental slip or omission”, or “a defect in form”.¹⁵⁷

Enforcement of adjudicated amount

18.39 In the English case of Macob Civil Engineering Limited v Morrison Construction Limited,¹⁵⁸ Dyson J (as he then was) succinctly emphasised that the “plain” intention of Parliament, in enacting the HGCRA159 for construction adjudication, was to allow the contractors to obtain a decision “on a provisional interim basis, and requiring the decision of the adjudicators to be enforced pending the final determination of disputes by arbitration, litigation, or agreement”. The clear intention of the Singapore Parliament, in enacting the SOPA, similarly is to provide fast cash flow relief to contractors and the Singapore courts have consistently reinforced and reiterated Parliament’s intention.¹⁶⁰

18.40 The SOPA provides that, if the respondent fails to pay the whole, or any part, of the adjudicated amount, when it is due and payable, the claimant is entitled, subject to the prescribed conditions, to enforce¹⁶¹ the adjudicated amount by the following non-legal and legal means:¹⁶²

1. Direct payment from the principal;¹⁶³
   
2. Creating a statutory lien on the “unfixed” goods supplied by the claimant;164
   
3. Providing the claimant with a statutory right to suspend work, or supply of goods, under the construction contract,¹⁶⁵ or
   
4. Enforcement of adjudication determination as a judgment debt.¹⁶⁶

The rôle of the courts in construction adjudication under the SOPA

18.41 The Singapore courts have, time and again, reiterated and applied the broad policy of the SOPA to ease the “cash flow” of the contractor and to provide them with an adjudication determination with “temporary finality” and enforceable in law.¹⁶⁷ The Singapore Court of Appeal, in the rather extreme case of Citiwall Safety No 2,¹⁶⁸ reiterated the principle of temporary finality over issues of breach of natural justice and the de minimis rule in the following emphatic terms:

18.42 The Singapore Court however, plays an essential rôle in the SOPA in four situations:

1. Parties are allowed to “submit a dispute relating to, or arising from, the contract to a court, or tribunal, or to any other dispute resolution proceedings” before the appointment of the adjudicator, or concurrently, but before the adjudication determination is delivered;¹⁶⁹
   
2. Parties are entitled to seek recourse from the Singapore Court, or arbitration, and challenge the adjudication determination in the final determination of the parties’ rights under the construction contract, including, or unlimited to, the correctness of the adjudication determination, and seek relief for repayment of the adjudicated amount with interest from the date of the adjudicated determination;170
   
3. The claimant is entitled to apply to the court to enforce an adjudication as a judgment of the courts;¹⁷¹
   
4. The respondent is entitled, subject to paying the “unpaid adjudicated amount” as security in court, to apply to the High Court to set aside the adjudication determination.¹⁷²

Recourse to courts to “submit a dispute relating to, or arising from, the contract” before an adjudication determination

18.43 The SOPA allows parties to commence concurrent actions in the Singapore courts in relation to “any dispute arising from the contract to a court or tribunal”.

18.44 Parties are allowed to “submit any dispute” relating to the construction contract under which the claimant may seek to invoke the adjudication determination¹⁷³ to the Singapore Court for decision.

18.45 The Singapore Court of Appeal, in Chua Say Eng,¹⁷⁴ endorsed this right when it held that the adjudicator was “not competent to decide whether he was validly appointed to adjudicate the matter” and was not competent to consider jurisdictional challenges. The Court of Appeal held that only the High Court of Singapore had the power to consider jurisdictional challenges under the SOPA – namely the validity and service of the payment claim, the validity and service of the payment response which affected the validity of the appointment of the adjudicator. The Court of Appeal also held that challenges to the validity of the appointment “can be taken up in separate court proceedings, or subsequently in proceeds under section 27 of the Act”, whilst the “adjudicator should proceed with the adjudication and leave the court to decide”.

18.46 As such, the SOPA allows the respondent to commence an application before the High Court, even before the adjudication is determined by the adjudicator, and to seek relief in the form of a declaration, and/or injunction, on jurisdictional grounds that the claimant is not allowed to proceed with the adjudication application and the appointment of the adjudicator is “null and void”.175

The parties’ right to challenge the adjudication determination at the final determination before the court or in arbitration

18.47 It is clear from the SOPA that the “fast and low cost adjudication system” is intended to be temporary finality, temporarily binding on the parties¹⁷⁶ and the parties are not precluded from commencing any action, either prior to the adjudication, or after the adjudication determination, under the existing construction contract for the court, or arbitrator, to finally determine all the disputes under the construction contract.

18.48 The SOPA expressly allows the claimant to invoke the “low cost adjudication system” before, after, or even concurrently with, the parties’ commencement of legal proceedings before the Singapore courts, or in arbitration, for the final determination of all disputes arising from the construction contract, including the subject matter of the adjudication application, arising from the construction contract between the parties.177

18.49 However, the SOPA expressly mandates that the adjudicator “must terminate the adjudication proceedings” on a dispute arising to or arising from the contract “if, before the adjudicator determines the dispute, the dispute is determined by a court, or tribunal, or any other dispute resolution proceedings”.¹⁷⁸

18.50 The court, arbitral tribunal, or other dispute resolution proceeding, in deciding the final rights of the parties under the construction contract, is not bound by any of the findings of the adjudicator and “must be able to look at the whole dispute”, whilst the “adjudicator’s actual reasoning has no legal, or evidential, weight” on the court.¹⁷⁹

18.51 The SOPA allows the parties to re-argue and challenge the whole merits of the adjudicator’s determination before the court, or arbitral tribunal, and the court, or arbitrator(s), may accept the adjudication determination, the adjudicated amount, as part of its determination of the parties’ final rights under the construction contract,¹⁸⁰ and, in considering whether the costs in the adjudication proceedings was reasonably incurred, to be awarded in the final determination of the dispute.¹⁸¹

18.52 The court, or the arbitral tribunal, is also fully entitled to reject, vary, or amend, the merits of the adjudication determination and adjudicated amount. The court, or arbitral tribunal, has the right to decide that the determination and adjudicated amount were made in error and to order the repayment, or refund, of the adjudicated amount, or any part thereof, to the respondent. If the court, or arbitral tribunal, declares that the adjudication determination and adjudicated amount were made in error and the amount is to be repaid to the respondent, the latter acquires a right, from the date of final declaration, under the “implied terms” of the construction contract and under the law of restitution, to claim the full refund along with interest from the date of the final determination.182

The claimant’s entitlement to apply to the court to enforce an adjudication determination as a court judgment

18.53 The main objective of the construction adjudication régime is to ease the cash flow of the contractor and to provide them with a “fast and low costs adjudication system” of a temporary binding nature that is enforceable in law.

18.54 In tandem and to facilitate the said objective, the SOPA provides the claimant with the right to invoke the assistance of the judicial process in Singapore to enforce the adjudication determination, albeit temporarily binding, as a judgment of the Singapore courts.¹⁸³

18.55 The procedure184 for “converting” the adjudication determination into a judgment, or order, of a court in Singapore under section 27(1) of the SOPA is enacted in Order 95 of the Rules of Court.¹⁸⁵

18.56 The SOPA gives the respondent the right to apply to the High Court judge to set aside the adjudication determination within 14 days from notification of the claimant’s application for leave to enforce the adjudication determination.¹⁸⁶

The court’s rôle in setting aside an adjudication determination

18.57 In an application to set aside an adjudication determination, the courts are invariably called upon to balance between the broad policy of Parliament to provide a “fast and low cost adjudication system” and their duty to prevent injustice.¹⁸⁷

18.58 In Singapore, the Court of Appeal has succinctly set out the rôle of the Singapore Court, when considering applications for setting aside adjudication determination made under the SOPA,188 in four recent seminal decisions:

1. Only the High Court of Singapore has the jurisdiction to hear applications for the setting aside of adjudication determination¹⁸⁹ and the High Court is exercising its original and supervisory powers in hearing such setting aside applications.¹⁹⁰ The Court of Appeal held that an application to set aside an adjudication application was “akin to judicial review”;
   
2. An application to set aside an adjudication determination is not an appeal on its merits and therefore it is not the rôle of the court to review the merits of the adjudicator’s determination, including the manner in which the adjudicator conducts the adjudication, unless it gives rise to jurisdiction issues including a breach of natural justice;¹⁹¹
   
3. The rôle of the High Court under the SOPA is only to consider jurisdictional challenges192 when considering to set aside applications, comprising of the following:
   
   
   
   • 3.1 The validity and service of the payment claim, payment response and the validity of the appointment of the adjudicator;¹⁹³
     
   • 3.2 Whether the adjudicator had conducted the adjudication proceedings “independently, impartially, in a timely manner, avoided unnecessary costs, or in breach of the rules of natural justice”;¹⁹⁴
     
   • 3.3 Whether the adjudicator exceeded their jurisdiction and did not have the jurisdiction to decide the adjudication application;¹⁹⁵ or
     
   • 3.4 Whether the adjudicator exceeded their jurisdiction196 in failing to comply with the “essential”, or “mandatory” requirements of the SOPA.¹⁹⁷
   
   

Conclusion

18.59 The SOPA in Singapore has brought about a radical, but welcome, change to the undesirable practices in the construction industry in which main contractors and owners utilise the grinding legal process to delay and deprive contractors, who have carried out the construction works, of their “life blood”, namely, cash flow. In practice, since its inception in 2006, the SOPA has reversed the “tables” with its “fast and low costs adjudication system”, temporary finality against the main contractors and owners and armed the downstream contractors with formidable remedies to recover due payments for works carried out promptly, albeit temporarily. Construction adjudication is on the rise¹⁹⁸ and a very fast developing area of law in Singapore.