Malaysia Airports successfully defends majority of contractor’s claims relating to the renovation of Penang International Airport

On 15 September 2021, the Shah Alam High Court rendered its decision for the recent trial between Syarikat Pembinaan Anggerik Sdn Bhd (“SPASB”) and Malaysia Airports Holdings Berhad (“MAHB”). The trial involved multiple aspects of construction and engineering law disputes.
In 2010, MAHB engaged SPASB as the main contractor to develop and upgrade Penang International Airport in Bayan Lepas, Pulau Pinang, which is the third busiest airport in the country by passenger traffic. The upgrading works involved renovating the Main Terminal Building which took place in a live and operating airport environment, as well as the upgrading the airside drainage system near the airport runways, both of which were issues in dispute between the parties.
Following the completion of the works, SPASB initiated a civil suit against MAHB in the sum of approximately RM66.8 million for purported balance of work payments, acceleration costs, prolongation costs and interest.
The High Court dismissed the entirety of SPASB’s claims for acceleration costs and prolongation costs on the basis of both liability and quantum.
In relation to balance of work payments, the High Court awarded the contractor approximately RM9.9 million plus interest.  The amount awarded in favour of SPASB for the balance of works was partially mitigated by the High Court’s decision to award RM750,000 to MAHB in liquidated ascertained damages for SPASB’s delays in completing the airport’s airside drainage works.
MAHB was represented by Ashok Kumar Ranai, Loshini Ramarmuty, Siew Suet Mey and Eric Gabriel Gomez, from the Construction and Engineering Practice Group of Skrine.
Alert prepared by Eric Gabriel Gomez (Associate) of the Construction and Engineering Practice Group of Skrine.

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