Covid-19 and MCO affects Construction Projects in Malaysia
- On the 16th of March, the Prime Minister of Malaysia, YAB, Tan Sri Dato’ Muhyiddin Yassin made a televised speech and officially promulgated the restricted activities order under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967. Effective by 18th March 2020, Malaysia officially implemented the Movement Control Order (MCO) measure from 18th March 2020 to 31st March 2020.
- On the 25th March 2020, the Prime Minister of Malaysia announced that the MCO is extended until 14th April 2020.
- On the 10th April 2020, the Prime Minister of Malaysia further announced that the MCO is extended until the 28th April 2020.
- While some construction projects are allowed to operate in the announcement made by our PM on the 10th April 2020 (albeit via certain strict conditions – see this the link below for more details on the construction activities that are allowed to operate subject to compliance with the Standard Operating Procedure (SOP) of MITI, compliance with MOH guidelines and guidelines by other enforcement agencies), for many construction companies large and small this latest announcement seems to be another 14 days of delays to their construction projects.
- Force Majeure – In many forms of contract, for example, PAM 2006 edition, PAM 2018 edition Force Majeure is a Relevant Event under Clause 23.8(a) of Clause 23.0 Extension of Time. And Force Majeure in PAM 2006 reads as follows: “…Force Majeure means any circumstances beyond the control of the Contractor caused by terrorist acts, governmental or regulatory action, epidemics and natural disasters…”.
- Extension of Time – Most standard forms of the contract require the giving notice of the delaying event within a stipulated time to the Architect / SO or Engineer. If giving notice to the Architect / SO / Engineer of the delaying event is a Condition Precedent according to the Contract (PAM 2006, PAM 2018, AIAC 2018) and if the Contractor fails to do so within the stipulated time mentioned in the contract, this is often fatal to the contractor.
- Duty to Mitigate – Contractors will often be requested to demonstrate that he has taken measures to mitigate the effects of the delay. For example, the contractor often has the duty/obligation under the contract’s requirement to mitigate – to use his best endeavours, to resequencing the work to avoid or reduce the delay caused. He cannot simply claim for prolongation and allow the delay event to run its course without carrying out his duty to mitigate.