The intent of this circular is clear: to ensure CIPAA has an immediate impact on the construction industry. Regretfully, questions have been raised about the validity of this KLRCA circular and it has been suggested by some parties that CIPAA can only apply prospectively to construction contracts that were entered into after April 15 2014. It is being argued in court that this would defeat the very intent of CIPAA. Therefore, it is suggested that even though CIPAA may have an impact on parties' contractual rights, it would still be necessary for CIPAA to apply to contracts that were entered into before April 15 2014.
It is suggested that as a matter of law, even though CIPAA seeks to interfere with contractual relationships, this should not matter. CIPAA was passed as legislation two years ago and the construction industry has had adequate time to prepare their contractual structure to take into account the effect of CIPAA. Therefore, although it may seem, initially, that CIPAA will be interfering with existing contractual rights, a proper analysis of the situation will make it clear that this not the case.
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