Dispute resolution panel orders Zelan to pay subcontractor RM22.4 mil

• The sum includes the balance of the unpaid amount under subcontractor progress payment certificates, approved variations, payment of the retention sum, as well as costs and expenses.

KUALA LUMPUR (June 3): An arbitral tribunal has ruled against Zelan Bhd’s (KL:ZELAN) in a dispute related to a construction contract with subcontractor Landasan Kapital (M) Sdn Bhd.

The tribunal ordered Zelan's unit Zelan Construction Sdn Bhd to pay Landasan Kapital a total of RM22.36 million plus interest, according to a bourse filing on Tuesday. 

The sum includes the balance of the unpaid amount under subcontractor progress payment certificates, approved variations, payment of the retention sum, as well as costs and expenses.

“The company is in the midst of reviewing the final award and is considering all options available,” Zelan said.

The dispute between Zelan Construction and Landasan Kapital pertains to Phase 3 of the construction of academic buildings and residential colleges for the International Islamic University Malaysia’s Centre for Foundation Studies in Kuantan.

Zelan Construction initiated arbitration proceedings against Landasan Kapital in August 2019 over an alleged breach of a contract linked to the project.

In the arbitration proceedings, Zelan Construction sought various declarations, including that the subcontractor failed to complete the works in accordance with the contract.

In turn, the subsidiary sought various payments from Landasan Kapital ranging from losses to specification deviations, amounting to a total of RM47.97 million. 

However, as announced by Zelan on Tuesday, the arbitral tribunal’s decision was in favour of Landasan Kapital, with Zelan Construction ordered to pay various sums in line with Landasan Kapital's counterclaims.

Shares in Zelan closed unchanged at four sen, valuing the company at RM33.8 million.

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