KluwerArbitration

Document information
Foreword
Publication Dato’ Mary Lim Thiam Suan
Arbitration in Malaysia: A The paradox of arbitration lies in its confidentiality and freedom of choice; yet it would be
Commentary on the hard to find another area of law that calls, nay, demands, for uniformity, consistency,
Malaysian Arbitration Act predictability and control than arbitration. This is where the United Nations Commission
on International Trade Laws (UNCITRAL) Model Law on International Commercial
Arbitration plays its quintessential role. In its march towards providing that workable
platform for commerce and business, legal practitioners and judicial systems, many
Jurisdiction jurisdictions have found it the preferred if not the right choice. Malaysia was no exception.
Malaysia When, after over fifty years of applying and enforcing the Arbitration Act of 1952, left over
from the pre-Independence days, where the reception of that Act, on the ground, was
frequently short and wanting, it was felt that Malaysia needed to do more. Amendment of
Bibliographic reference the 1952 Act was not enough; an entirely new piece of legislation seemed the only credible
response.
Dato’ Mary Lim Thiam Suan,
'Foreword', in Thayananthan And, so the Arbitration Act 2005 [Act 646] was enacted. The Act provides for both domestic
Baskaran , Arbitration in and international arbitration, as defined in the Act, and it adopts substantially the
Malaysia: A Commentary on UNCITRAL Model Law in respect of both types of arbitrations. Consonant with the inscribed
the Malaysian Arbitration principle of party autonomy, the extent of the application of the Act, in either case, is
Act, (© Kluwer Law subject to parties’ choice. Since the Arbitration Act came into force on 15 March 2006, it
International; Kluwer Law would not be wrong to say that the Act has certainly changed the law and the landscape of
International 2019) pp. xix - arbitration in Malaysia.
xx The courts of Malaysia have interpreted the Act in the last decade and more, with a rigour
that has seen the Act taken back to Parliament for no less than three separate sets of
amendments. The most recent exercise was in 2018, driven principally by the Federal
Court’s decision in Far East Holdings Bhd & Anor v. Majlis Ugama Islam dan Adat Resam
Melayu Pahang and other appeals [2018] 1 MLJ 1 on the scope and application of section 42
of the Arbitration Act 2005. Section 42 was the mechanism under which an arbitrating party
may refer questions of law arising out of an award in a domestic arbitration to the courts.
P xix The Federal Court in Far East Holdings gave what is generally regarded as a tad too ‘wide’
P xx an interpretation to the scope of section 42. In response, Parliament amended the Act in
early 2018 to delete section 42. A party may no longer refer questions of law arising out of
an award to the courts.
This book is an extensive commentary on the Arbitration Act 2005, drawing primarily on the
courts’ interpretation of the Act. It is timely and a much-needed book, for the same
reasons why the Act was enacted in the first place. The writing and the publication of this
book is a reflection of the maturity now reached by the arbitral community of Malaysia.
Practitioners and business need to know where Malaysia stands in the law of arbitration.
This book meets that need: tracing the origin of the provisions of the Act to the Model Law
and other legislation on which the Act is based, keeping track of the developments since
enactment and filling the gaps as to how the developments and the decisions of our courts
have kept pace or otherwise with other Model Law and non-Model jurisdictions.
It is a painstaking and diligent piece of work that can only be properly discharged by
someone both familiar and competent in this field. Thayananthan Baskaran must be
commended and congratulated for having undertaken this exercise, so well. I am confident
that his superb work will not only provide guidance on the history of the Arbitration Act
2005 and its development since the Act came into force; it will be a useful and resourceful
compendium to anyone associated, in any measure or degree, with arbitration.
Dato’ Mary Lim Thiam Suan
Judge of the Court of Appeal of Malaysia
June 2019
P xx

1
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Preface
Publication Arbitration in Malaysia has been governed by laws since the Arbitration Ordinance XIII of
1809 enacted two hundred and ten years ago. The Ordinance applied in the Straits
Arbitration in Malaysia: A Settlement, which comprises the present-day states of Malacca and Penang, in Malaysia,
Commentary on the and Singapore. The laws that governed arbitration in Malaysia up to the Arbitration Act
Malaysian Arbitration Act 1952 (1) were based on the laws of England.
The Arbitration Act 2005 came into force on 15 March 2006, the Ides of March. The Act
introduced the UNCITRAL Model Law on International Commercial Arbitration to Malaysia
Jurisdiction and significantly changed the law of arbitration in Malaysia.
Malaysia This book is a commentary on the Arbitration Act 2005. The commentary follows the Act
section by section. In sequential order, it provides the text of a section of the Act, followed
by an explanation of the purpose of the section. The commentary then traces the origin of
Bibliographic reference each section of the Act to the Model Law or the statute it is based on, as well as the history
of the Model Law or statute. This is followed by an explanation of provisions of each
'Preface', in Thayananthan section in terms of their application and effect.
Baskaran , Arbitration in
Malaysia: A Commentary on The commentary is primarily based on the interpretation of the Arbitration Act 2005 by the
the Malaysian Arbitration courts of Malaysia in the decade since it has been in force.
Act, (© Kluwer Law Insofar as particular provisions of the Arbitration Act 2005 have yet to be the subject of a
International; Kluwer Law judgment, reliance is placed on the Analytical Commentary. This report (2) provides a
International 2019) pp. xxi - summary of why a certain provision of the 1985 Model Law was adopted and what it is
xxii intended to cover, as well as an explanation and interpretation of particular words. The
report, however, does not give a full account of the travaux preparatoires.
P xxi
P xxii
Apart from this report, reliance is also placed on the rules of statutory interpretation in
interpreting provisions of the Arbitration Act 2005 that have yet to be interpreted by the
courts.
I would like to thank Roveena Tara, my wife, who encouraged me to write this book and
then endured me writing this book over the last four years late into the early hours. Parama
Kausala Devi Baskaran, my mother, who edited the initial drafts of the book. Kevin Richard
Nathan and Tan Zu Hao, my colleagues at the Malaysian Bar, who assisted me with the
research for this book. Lee Yong Lie and Elizabeth Florence Lee, who typed this book from
the original illegible manuscript, which now fills thirty notebooks. Thank you.
Thayananthan Baskaran
Damansara Heights and the Temple
Monday, 6 May 2019
P xxii

References
1) British North Borneo, as Sabah, a State now in Malaysia was then known, and Sarawak
adopted the English Arbitration Act of 1952 as their respective Ordinance in 1952. In
1963, North Borneo and Sarawak joined the Federation of Malaysia. On 1 Nov. 1972,
Malaysia adopted the arbitration laws prevailing in Sabah and Sarawak and it became
known as the Arbitration Act 1952, which is based on the English Arbitration Act 1950.
2) See Analytical Commentary, Introduction, para. 5.

2
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Preliminary
Publication An Act to reform the law relating to domestic arbitration, provide for international
arbitration, the recognition and enforcement of awards and for related matters.
Arbitration in Malaysia: A
Commentary on the ENACTED by the Parliament of Malaysia as follows:
Malaysian Arbitration Act PRELIMINARY

1. Short Title and Commencement

Jurisdiction
(1) This Act may be cited as the Arbitration Act 2005.
Malaysia (2) This Act comes into operation on a date to be appointed by the Minister by notification
in the Gazette.
Bibliographic reference §1.01 COMMENTARY
'Preliminary', in The Arbitration Act 2005 came into operation on 15 March 2006. As the long title of the Act
Thayananthan Baskaran , states, the Act was intended to reform the law of arbitration in Malaysia. This was to be
Arbitration in Malaysia: A achieved principally by incorporating the 1985 Model Law into the laws of Malaysia with
Commentary on the certain amendments.
Malaysian Arbitration Act,
(© Kluwer Law International; As the Arbitration Act 2005 was intended to reform the law on arbitration by incorporating
Kluwer Law International the 1985 Model Law one must be cautious when relying on authorities based on the
2019) pp. 1 - 24 Arbitration Act 1952.
In this context, the Federal Court, in Far East Holdings Berhad & Ors v. Majlis Ugama Islam
dan Adat Resam Melayu Pahang [2017] 8 AMR 313 at paragraphs 93, 100, 108 and 109, after
P 1 reviewing the history of arbitration legislation in Malaysia, held that the Arbitration Act
P 2 2005 should be interpreted independently. (1) Judgments under the Arbitration Act 1952
were no longer relevant, as the Arbitration Act 2005 had radically changed the law on
arbitration in Malaysia, by adopting the 1985 Model Law.
P2
P3

2. Interpretation
(1) In this Act, unless the context otherwise requires –
‘award’ means a decision of the arbitral tribunal on the substance of the dispute and
includes any final, interim or partial award and any award on costs or interest but does
not include interlocutory orders;
‘High Court’ means the High Court in Malaya and the High Court in Sabah and Sarawak
or either of them, as the case may require;
‘Minister’ means the Minister charged with the responsibility for arbitration;
‘State’ means a sovereign State and not a component state of Malaysia, unless
otherwise specified;
‘presiding arbitrator’ means the arbitrator designated in the arbitration agreement as
the presiding arbitrator or chairman of the arbitral tribunal, a single arbitrator or the
third arbitrator appointed under subsection 13(3);
‘arbitration agreement’ means an arbitration agreement as defined in section 9;
‘party’ means a party to an arbitration agreement or, in any case where an arbitration
does not involve all the parties to the arbitration agreement, means a party to the
arbitration;
‘seat of arbitration’ means the place where the arbitration is based as determined in
accordance with section 22;
‘international arbitration’ means an arbitration where –
(a) one of the parties to an arbitration agreement, at the time of the conclusion of
that agreement, has its place of business in any State other than Malaysia;
(b) one of the following is situated in any State other than Malaysia in which the
parties have their places of business:
(i) the seat of arbitration if determined in, or pursuant to, the arbitration
agreement;
(ii) any place where a substantial part of the obligations of any commercial or
other relationship is to be performed or the place with which the subject-
matter of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration
agreement relates to more than one State;
‘domestic arbitration’ means any arbitration which is not an international
arbitration;
‘arbitral tribunal’ means an emergency arbitrator, a sole arbitrator or a panel of

3
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitrators.
(2) For the purposes of this Act –
(a) in the definition of ‘international arbitration’ –
(i) where a party has more than one place of business, reference to the place of
business is that which has the closest relationship to the arbitration
agreement; or
(ii) where a party does not have a place of business, reference to the place of
business is that party’s habitual residence;
P3
P4
(b) where a provision of this Act, except section 3, leaves the parties free to determine
a certain issue, such freedom shall include the right of the parties to authorize a
third party, including an institution, to determine that issue;
(c) where a provision of this Act refers to the fact that the parties have agreed or that
they may agree or in any other way refers to an agreement of the parties, that
agreement shall include any arbitration rules referred to in that agreement;
(d) where a provision of this Act refers to a claim, other than in paragraphs 27(a) and
34(2)(a), it shall also apply to a counterclaim, and where it refers to a defence, it
shall also apply to a defence to that counterclaim.

§2.01 INTRODUCTION
Section 2 of the Arbitration Act 2005 defines various terms used in the Act and also
provides rules for the interpretation of the Act. Section 2 is based in part on Articles 1 and
2 of the 1985 Model Law. We will consider each individual provision of this section below.

§2.02 AWARD
The definition of ‘award’ is broad and covers every type of award that may be made by an
arbitral tribunal save for interlocutory orders.

§2.03 HIGH COURT

The definition of ‘High Court’ in the Arbitration Act 2005 differs from Article 2(c) of the 1985
Model Law, which defines ‘court’ as ‘a body or organ of the judicial system of a state’.
The definition in the Act is more specific than the 1985 Model Law. This may be because the
intention behind both provisions differs.
The definition in the 1985 Model Law, according to the Analytical Commentary, (2) appears
self-evident and accordingly superfluous. However, the definition of ‘court’ and ‘arbitral
tribunal’ was included to distinguish the two. This is because, in certain languages,
common words are used for both entities. Furthermore, certain arbitral institutions include
the word ‘court’ in their name, for example the International Chamber of Commerce
International Court of Arbitration and the London Court of International Arbitration.
P 4 The intention behind the definition of ‘High Court’ in the Arbitration Act 2005 appears to be
P 5 to designate a court to perform various functions under the Act. In this regard, its
purpose is more akin to Article 6 of the 1985 Model Law rather than Article 2(a).
The definition of ‘High Court’ effectively means that the following applications have to be
made to this court under the Act:
(1) an application for interim measures under section 11(1);
(2) an application for a decision on an unsuccessful challenge against an arbitrator for
lack of impartiality, independence or qualifications under section 15(3);
(3) an application for a decision on the termination of an arbitrator’s mandate due to
inability to perform the functions of that office under section 16(2);
(4) an appeal against a ruling on a preliminary question by an arbitral tribunal that it
has jurisdiction under section 18(8);
(5) an application for assistance in taking evidence under section 29(1);
(6) an application to set aside an award under section 37(1);
(7) an application for the recognition and enforcement of an award under section 38(1);
(8) an application for the determination of a question of law arising in the course of the
arbitration under section 41(1);
(9) an application for costs to be taxed, where the arbitral tribunal has ordered that
costs and expenses be paid but has failed to specify the amount under section 44(1)
(b);
(10) an application for an arbitral tribunal to deliver an award, where the arbitral tribunal
refuses to deliver the award before the payment of its fees and expense, under
section 44(4);
(11) an application for extension of time for commencement of the arbitration
proceedings under section 45; and

4
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (12) an application for extension of time for the making of an award under section 46(1).
It should also be noted that sections 15(5) and 18(10) of the Arbitration Act 2005 provide
that no appeal shall lie against a decision of the High Court made under these sections.
This is to prevent delay and provide finality.
Although the words ‘High Court’ are defined, section 10(1) of the Arbitration Act 2005 refers
to ‘a court’ rather than the High Court. This would suggest that an application for stay of
proceedings pending arbitration may be made in any court in which the proceedings were
commenced and not necessarily in the High Court.
This interpretation of the definition of High Court and section 10 were confirmed by the
High Court, in UBA Urus Bina Asia Sdn Bhd v. Quirk & Associates Sdn Bhd & Anor [2016] 4 CLJ
468 at paragraph 37, where it was, inter alia, held:
Unlike ss. 11, 15, 18, 29, 37, 38, 39, 41, 42, 43, 44, 45, 46 and 50 of the Arbitration
Act 2005, where the word ‘court’ is specifically identified as the ‘High Court’, the
words used in s. 10 is ‘a court’. Arguably, this will include the Magistrates and
Sessions courts as the term ‘court’ is not defined in s. 2 of the Arbitration Act
P5 2005; but the term ‘High Court’ is. With the amendments to the financial limits
P6 of the subordinate courts, applications for orders under s. 10 can properly
come within the jurisdiction of the subordinate courts.

§2.04 MINISTER
The ‘Minister’ is defined as the minister charged with the responsibility for arbitration, who
is presently the Minister in the Prime Minister’s Department in charge of Legal Affairs.

§2.05 STATE
The definition of ‘State’ seeks to distinguish between sovereign nations and the thirteen
component states of Malaysia.
The High Court, in Twin Advance (M) Sdn Bhd v. Polar Electro Europe BV [2013] 3 CLJ 294 at
paragraph 27, decided, based on the words ‘an award from a foreign State’ in section 38
and ‘an award, irrespective of the State in which it was made’ in section 39, that an award
made in any State may be enforced in Malaysia under these sections, which provide for the
recognition and enforcement of awards. The High Court also held that, unlike sections 38
and 39, section 37 that provides for the setting aside of awards does not refer to a foreign
‘State’. Therefore, an application to set aside an award may only be made in the foreign
state in which the award was made and not in Malaysia.

§2.06 PRESIDING ARBITRATOR

The definition of ‘Presiding Arbitrator’ envisages three distinct scenarios:
(1) an arbitrator designated as the presiding arbitrator or chairman of the arbitral
tribunal in the arbitration agreement;
(2) a single arbitrator; or
(3) the third arbitrator appointed by the two party-appointed arbitrators, where the
parties have failed to agree on the procedure for the appointment of the arbitral
tribunal under section 13(3) of the Arbitration Act 2005.
The High Court, in Pendaftar Pertubuhan Malaysia v. Establishmen Tribunal Timbangtara
Malaysia & Ors [2011] 6 CLJ 684 at paragraph 26, emphasized that there must be an
arbitration agreement between the parties before there could be a presiding arbitrator
under this definition. In the absence of such an agreement, the presiding arbitrator would
not have jurisdiction.

§2.07 ARBITRATION AGREEMENT

The definition of ‘arbitration agreement’ simply cross refers to the definition in section 9 of
the Arbitration Act 2005. This important definition is considered in §9.03 infra.
P6
P7

§2.08 PARTY
The definition of ‘Party’, which appears self-evident, encompasses two scenarios:
(1) a party to an arbitration agreement; and
(2) a party to an arbitration, where the arbitration does not involve all the parties to the
agreement.
The second scenario appears to be intended to deal with arbitrations that only include the
two parties in dispute but arise from a multiparty arbitration agreement.
Although the definition of ‘party’ appears self-evident, it has surprisingly generated a fair
amount of controversy.

5
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Quite uncontroversially, the High Court, in Pendaftar Pertubuhan supra at paragraph 26,
emphasized that there could be no ‘party’ within this definition in the absence of an
arbitration agreement. Perhaps, more controversially, the High Court, in Sundra Rajoo v.
Mohamed Abd Majed & Anor [2011] 6 CLJ 923, included an arbitrator within this definition of
a ‘party’ on the basis that an arbitration agreement is a trilateral agreement between the
parties and the arbitrator.
In this context, the High Court, in Sundra Rajoo supra at paragraph 10(f), inter alia, held:
The learned counsel for the applicant say that (i) the applicant should be
regarded as a party to the arbitration within the meaning of s. 2 of AA 2005 and
assert that a contract exists between the parties and the arbitrators; the
aforementioned contract is bi-lateral and creates rights and obligations for
both the arbitrators and parties. (ii) However, where arbitration is administered
by an arbitral institution, the contractual relationship becomes triangular.
There is much merit in the applicant’s submission.

§2.09 SEAT OF ARBITRATION

The definition of ‘seat of arbitration’ simply cross refers to section 22 of the Arbitration Act
2005 and will be considered in §22.01 to §22.04 infra.

§2.10 INTERNATIONAL ARBITRATION AND DOMESTIC ARBITRATION

The definition of ‘international arbitration’ in sections 2(1) and 2(2) of the Arbitration Act
2005 reflects Articles 1(3) and (4) of the 1985 Model Law.
The definition of ‘international arbitration’ in the Arbitration Act 2005 slightly modifies the
definition in the 1985 Model Law. The words ‘different States’ in Article 1(3)(a) and ‘outside
the State’ in Article 1(3)(b) of the 1985 Model Law are substituted with the words ‘State
other than Malaysia’. The geographically neutral definition used in the 1985 Model Law
appears preferable as an arbitration is international if it involves two different States
regardless of whether one of them is Malaysia.
P7
P8
Other than this change, the words ‘place of arbitration’ in Article 1(3)(b)(i) of the 1985 Model
Law is substituted with the words ‘seat of arbitration’ in the Arbitration Act 2005. This is
simply a stylistic change, as the term seat of arbitration is used consistently in the
Arbitration Act 2005 instead of the place of arbitration.
The definition of ‘international arbitration’ is of significance as it determines which Parts of
the Arbitration Act 2005 apply to the arbitration under section 3.
Due to this significance, and the need for certainty, a precise definition of international
arbitration was sought. (3) However, too precise a definition may remove many
arbitrations, which are truly international. As such, Article 1(3) of the 1985 Model Law has
defined international arbitration with varying degrees of precision.
Article 1(3)(a) of the 1985 Model Law sets the basic criterion that the parties have their
place of business in different States. This definition is adopted from Article 1(1) of the 1980
United Nations Convention on Contracts for the International Sale of Goods. The key
determining factor here is the place of business of a party. Other characteristics of a party,
such as nationality or place of registration or incorporation, are accordingly not relevant.
(4)
The criterion used in Article 1(3)(a) of the 1985 Model Law is that the parties have their
places of business ‘in different States’. Therefore, it is irrelevant (5) whether either party
has its place of business in the State enacting the 1985 Model Law. Therefore, assuming (6)
State X has enacted the 1985 Model Law, an arbitration would be an international
arbitration if it was between State Y and State Z or between State Y and State X.
Unfortunately, this does not appear to have been recognized in the Arbitration Act 2005,
which substitutes the words ‘in different States’ with the words ‘States other than
Malaysia’. The definition, therefore, may restrict international arbitration to a scenario
where one party has its place of business in Malaysia and the other party has its place of
business outside Malaysia, without clearly capturing the scenario where both parties have
their place of business in different States outside Malaysia.
The Federal Court, in Tan Sri Dato’ Seri Vincent Tan Chee Yioun & Anor v. Jan De Nul (M) Sdn
Bhd & Anor and another appeal [2018] MLJU 1545 at paragraphs 41, 43, 45 and 48, held that
the definition of the words ‘international arbitration’ in section 2 of the Arbitration Act
2005 was exhaustive. Therefore, these words could not mean anything other than what was
expressly provided in section 2.
The Federal Court also held that the express words used in section 2(1)(a) of the Arbitration
Act 2005 to define international arbitration were clear, unambiguous and plain. The
requirements for an international arbitration under section 2(1)(a) was that there must be:
(1) a party;

6
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (2) to an arbitration agreement; and
P8
P9
(3) such a party must have its place of business in any State other than Malaysia.
The Federal Court emphasized the need to refer to the specific arbitration agreement
between the parties to ascertain if there was an international arbitration, as such an
agreement was one of the requirements under section 2(1)(a).
The Federal Court also emphasized that section 2(1)(a) required a ‘party’ to be from a State
other than Malaysia, but there was no requirement for such a party to be a substantive
party. The extent of such a party’s involvement in the arbitral proceedings was immaterial
in determining if the arbitration was international or otherwise.
Article 1(3)(b) of the 1985 Model Law defines international arbitration by reference to
place. Where the (a) place of arbitration, (b) place where a substantial part of the
commercial relationship is to be performed or (c) the place with which the subject matter
of the dispute is most closely connected differs from the State in which the parties have
their place of business, then the arbitration is international. Again, it is not relevant (7) to
the test of internationality whether any of these places is the State that enacted the 1985
Model Law.
Unfortunately, this was not recognized in the Arbitration Act 2005, which substitutes the
words ‘outside the State’ with the words ‘any State other than Malaysia’. This may confine
the definition of international arbitration to a scenario where the parties have their place
of business in Malaysia but the places of arbitration, substantial performance or closest
connection is outside Malaysia.
The three relevant places referred to in Article 1(3)(b) are the places of arbitration,
substantial performance and closest connection. Of these three, only the place of
arbitration is an arbitration-related criterion. Therefore, an international link may not be
established by any other arbitration-related criterion such as a foreign arbitrator or choice
of foreign law. (8)
The place of arbitration is relevant where ‘determined in, or pursuant to, the arbitration
agreement’ under Article 1(3)(b)(i). Where the place of arbitration is specified in the
arbitration agreement, this criterion for internationality may easily be determined at the
outset. However, where the place of arbitration is to be determined subsequently pursuant
to the arbitration agreement, there could be a long period of uncertainty as to whether the
arbitration is international or otherwise. The Analytical Commentary (9) takes the position
that this criterion will not be met by a stipulation authorizing the arbitral tribunal to
determine the place of arbitration.
The second place referred to is the place of substantial performance. This scenario (10)
would arise where two parties agree to a sole distributorship in a foreign market or an
employer and a contractor agree to perform works overseas.
P9
P 10
The third place is the place that has the closest connection with the dispute. This is likely
to be very exceptional (11) and may be intended to cater to scenarios where the
international character cannot be ascertained until the dispute has arisen.
The final criterion is set out in Article 1(3)(c) of the 1985 Model Law and provides for a
situation where the parties have agreed that the subject matter of the arbitration
agreement relates to more than one country. The word ‘country’ is substituted with the
word ‘State’ in the Arbitration Act 2005 and is consistent with the definition and use of this
term in the Act. This provision covers the situation where parties have expressly agreed, to
avoid any uncertainty, that an arbitration is international. The parties’ right to agree to this
further strengthens the principle of party autonomy.
Article 1(4) of the 1985 Model Law, which is reflected in section 2(2)(a) of the Arbitration Act
2005, sets out the test for determining the place of business. Where a party has more than
one place of business, regard will be given to the place of business that has the closest
relationship to the arbitration agreement. In this context, the Analytical Commentary (12)
provides the example of a contract, including the arbitration clause, being fully negotiated
at a branch office separate from the principal office, which would make the branch the
most closely connected with the arbitration agreement.
The other scenario provided for by Article 1(4)(b), which is reflected in section 2(2)(a)(ii), is
where a party does not have a place of business, in which case reference is to be made to
his habitual residence.
The definition of ‘domestic arbitration’ in section 2(1) of the Arbitration Act 2005 is not
taken from the 1985 Model Law, which does not define this term, as the 1985 Model Law is
concerned with international commercial arbitration. The definition of a domestic
arbitration is, in any event, simply the opposite of an international arbitration.

§2.11 ARBITRAL TRIBUNAL

Section 2 of the Arbitration Act 2005 defines an ‘arbitral tribunal’ as an emergency
arbitrator, a sole arbitrator or a panel of arbitrators. The words ‘an emergency arbitrator’

7
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 were inserted by the Arbitration (Amendment) (No 2) Act 2018.
Apart from this recent insertion, the definition of ‘arbitral tribunal’ in section 2 of the
Arbitration Act 2005 reflects the definition in Article 2(b) of the 1985 Model Law. This
definition of an ‘arbitral tribunal’ does not require an arbitrator to have any particular
qualifications or experience and adheres to the principle of party autonomy. This has been
somewhat colourfully described by the Court of Appeal in Garden Bay Sdn Bhd v. Sime
Darby Property Berhad [2017] AMEJ 1599 at paragraph 9:
In essence, the Convention allows an arbitration award made in one Convention
country to be enforceable in another country. The Convention supports party
P 10 autonomy. Parties to an arbitration agreement can even agree to appoint a
P 11 tribal chief of a remote part of Malaysia as an arbitrator and agree to be
bound by his award. That award can be enforceable in any Convention
countries.
There was a concern that the original definition of an ‘arbitral tribunal’ in section 2 of the
Arbitration Act 2005 may not allow for an emergency arbitrator. This may have rendered
any order by an emergency arbitrator unenforceable. These concerns became pressing
with the widespread adoption of emergency arbitration provisions in the rules of
arbitration institutions. For example, Schedule 3 of the 2018 Asian International Arbitration
Centre (AIAC) Arbitration Rules provide for the appointment of an emergency arbitrator. To
overcome these concerns, the definition of ‘arbitral tribunal’ was amended by the
Arbitration (Amendment) (No 2) Act 2018 to expressly include an ‘emergency arbitrator’.

§2.12 ARBITRATION
The Arbitration Act 2005 does not define ‘arbitration’. However, the courts have defined
arbitration in several judgments after the Arbitration Act 2005 came into force.
These judgments start with Majlis Amanah Rakyat v. Kausar Corp Sdn Bhd [2009] MLJU 1697
at page 12, where arbitration was defined as follows:
In this connection, counsel for the Defendant also submitted for my
consideration the useful passage by Lord Mustill sitting in the Judicial
Committee in the case of Pupuke Service Station Ltd v Caltex Oil (NZ) Ltd (which
was included as an appendix in the Gold & Resource Development decision),
which is very pertinent to note for purposes of this application. The passage
reads:
Arbitration is a contractual method of resolving disputes. By their
contract parties agreed to entrust the differences between them to
the decision of an Arbitrator or panel of Arbitrators, to the exclusion
of the courts, and they bind themselves to accept that decision, once
made, whether or not they think it right. In prospect, this method
often seems attractive. In retrospect, this is not always so. Having
agreed at the outset to take his disputes away from the court the
losing party may afterwards be tempted to think better of it, and ask
the court to interfere because the Arbitrator has misunderstood the
issues, believed unconvincing witness, decided against the weight of
evidence, or otherwise arrived at a wrong conclusion. All developed
systems of arbitration law have in principle set their face against
accommodating such a change of mind. The parties have made the
choice, and must abide by it. This general principle is, however,
applied in different ways under different systems, according to the
nature of the complaint.
This definition of arbitration has subsequently been adopted in Xavier Francis & Anor v.
Quality Property Development Sdn Bhd [2013] 1 LNS 764 at paragraph 15 and Sanlaiman Sdn
Bhd v. Kerajaan Malaysia [2013] 3 MLJ 755 at paragraph 48.
The High Court, in Cyber Business Solutions Sdn Bhd v. Elsag Datamat SPA [2012] 1 CLJ 115 at
paragraph 15, defined arbitration slightly differently in the following terms:
Arbitration is a process of resolving a dispute or a grievance outside a court
P 11 system by presenting it for decision to an impartial third party. Both sides in
P 12 the dispute must agree in advance to the choice of arbitrator and certify that
they will abide by the arbitrator’s decision. Hence, the forum for arbitration
derived its jurisdiction from the agreement by both parties and no other … .
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
Democratic Republic [2017] 6 AMR 219 at paragraph 149, defined arbitration by reference to
the two core principles, that is a contract and dispute resolution, as follows:
‘There is no universal definition of arbitration … Each jurisdiction may apply its
own ‘spin’ in deciding what may and what may not be arbitrated, and how the
arbitral process is to be conducted … Different commentators have defined
arbitration differently. However there are core principles that can be found in

8
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 all the definitions. The core principles include: the need for an arbitral
agreement; a dispute, a reference to a third party for its determination; and an
award by the third party’ (Arbitration of Commercial Disputes by Andrew
Tweeddale and Keren Tweeddale at 2.01 and 2.02).
Apart from these judgments, Rene David, in Arbitration in International Trade (Springer
1985), defines arbitration as follows:
Arbitration is a device whereby the settlement of a question, which is of interest
for two or more persons, is entrusted to one or more persons – the arbitrator or
arbitrators – who derive their powers from a private agreement, not from the
authorities of the State, and who are to proceed and decide the case on the
basis of such an agreement.
Based on these definitions, there are two constituent elements of arbitration:
(1) first, the arbitrator’s task is to resolve a dispute; and
(2) second, the source of this judicial role is contract.
There is therefore both (13) a judicial and a contractual element.

§2.13 THIRD PARTY

Section 2(2)(b) of the Arbitration Act 2005 reflects Article 2(d) of the 1985 Model Law. This
section is intended to prevent too strict an interpretation of the provisions of the Act which
leave the parties free to agree on matters. The broad interpretation allowed by this
section enables the parties to authorize a third party to determine these issues. In
practice, this will include terms in an arbitration agreement that allow an arbitral
institution to determine the number of arbitrators, the place of arbitration and other
procedural matters. (14)
P 12
P 13

§2.14 ARBITRATION RULES

Section 2(2)(c) of the Arbitration Act 2005 reflects Article 2(e) of the 1985 Model Law. Like
section 2(2)(b), this section is also intended to prevent too strict an interpretation of the
provisions of the Act that allow the parties the freedom to agree on various matters. This
section makes clear that such freedom includes the freedom to agree on a set of
arbitration rules, which will determine various matters.
The High Court, in AV Asia Sdn Bhd v. Pengarah Kuala Lumpur Regional Centre for Arbitration
& Anor [2013] 10 CLJ 115, considered section 2(2)(c) in the context of an arbitration
agreement that referred to the KLRCA Arbitration Rules. In particular, the issue was
whether the number of arbitrators ought to be determined in accordance with the 2012
KLRCA Arbitration Rules, Part II, Article 7(1), which provides for three arbitrators to be
appointed where the parties are unable to agree on the number of arbitrators, or section
12(2)(b) of the Arbitration Act 2005, which provides for a single arbitrator to be appointed
in the case of domestic arbitration, where the parties have failed to agree. Although the
High Court declined jurisdiction on the basis of sections 8 and 18 of the Arbitration Act
2005, it is submitted that, based on section 2(2)(c), Article 7(1) of Part II of the 2012 KLRCA
Arbitration Rules would have prevailed, as the parties had not entirely failed to determine
the number of arbitrators under section 12(2). Instead, the parties had determined this to
the extent of agreeing on the KLRCA Arbitration Rules, as allowed by section 2(2)(c). And, in
accordance with Article 7(1) of Part II of these Rules, the number of arbitrators should be
three.

§2.15 CLAIM AND COUNTERCLAIM

Section 2(2)(d) of the Arbitration Act 2005 reflects Article 2(f) of the 1985 Model Law.
Essentially, this section equates the application of the Act on claims to counterclaims and
on defences to defences to counterclaims. There are two exceptions, which both relate to
the termination of the proceedings where a claim is not communicated or is withdrawn.
Naturally, if a counterclaim is not communicated or withdrawn, the proceedings would not
similarly terminate but would instead continue.
P 13
P 14

3. Application to Arbitrations and Awards in Malaysia

(1) This Act shall apply throughout Malaysia.
(2) In respect of a domestic arbitration, where the seat of arbitration is in Malaysia –
(a) Parts I, II and IV of this Act shall apply; and
(b) Part III of this Act shall apply unless the parties agree otherwise in writing.
(3) In respect of an international arbitration, where the seat of arbitration is in Malaysia –
(a) Parts I, II and IV of this Act shall apply; and

9
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) Part III of this Act shall not apply unless the parties agree otherwise in writing.
(4) For the purposes of paragraphs (2)(b) and (3)(b), the parties to a domestic arbitration
may agree to exclude the application of Part III of this Act and the parties to an
international arbitration may agree to apply Part III of this Act, in whole or in part.

§3.01 INTRODUCTION
Section 3 of the Arbitration Act 2005 provides for the application of the Act in Malaysia.
Section 3 differs materially from Articles 1(1) and (2), which are the equivalent provisions of
the 1985 Model Law.

§3.02 DOMESTIC AND INTERNATIONAL ARBITRATION

Unlike the 1985 Model Law, section 3 does not expressly limit the application of the Act to
international commercial arbitration.
Instead of the Act being limited to international arbitration, it applies to both domestic
and international arbitration in the manner provided in section 3. Although the 1985 Model
Law was designed to establish a special regime for international arbitration, States were
free (15) to take the 1985 Model Law as a basis for legislation on domestic arbitration, so as
to avoid a dichotomy within a State’s arbitration law.
As of 2010, (16) thirty-seven of the eighty countries that have adopted the 1985 Model Law
have also chosen to enact the Model Law as their domestic arbitration legislation.
Although Malaysia has a unitary system for domestic and international arbitration, the
definition of international arbitration remains significant, as different parts of the
Arbitration Act 2005 apply to domestic and international arbitration as set out in section 3.
P 14
P 15

§3.03 COMMERCIAL
Unlike Article 1(1) of the 1985 Model Law, the Arbitration Act 2005 is not limited to
‘commercial’ arbitration. The word ‘commercial’ is not expressly defined in the 1985 Model
Law. Instead, there is a footnote to Article 1(1) of the 1985 Model Law, which provides:
The term ‘commercial’ should be given a wide interpretation so as to cover
matters arising from all relationships of a commercial nature, whether
contractual or not. Relationships of a commercial nature include, but are not
limited to, the following transactions: any trade transaction for the supply or
exchange of goods or services; distribution agreement; commercial
representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation
agreement or concession; joint venture and other forms of industrial or business
cooperation; carriage of goods or passengers by air, sea, rail or road.
The Arbitration Act 2005 is not limited to ‘commercial’ arbitration in this sense. This wider
application of the Arbitration Act 2005 and its significance will be considered further under
§4.01 infra in the context of arbitrability of the subject matter of arbitration.

§3.04 SEAT OF ARBITRATION IN MALAYSIA

Section 3(2) and (3) of the Arbitration Act 2005 limit the application of the Act to domestic
and international arbitration with a seat in Malaysia and do not expressly provide for
international arbitrations with a seat outside Malaysia. When the Act was initially enacted
there was no exception to this unlike Article 1(2) of the 1985 Model Law, which provides that
‘The provisions of this Law, except Articles 8, 9, 35 and 36, apply only if the place of
arbitration is in the territory of this State.’
The 1985 Model Law accordingly only applies if the place of arbitration is the State in
which it is enacted with four exceptions for stay of proceedings, interim measures and the
recognition and enforcement of an award.
The initial absence of these exceptions in the Arbitration Act 2005 gave rise to some
degree of uncertainty.
For example, in Innotec Asia Pacific Sdn Bhd v. Innotec GmbH [2007] 8 CLJ 304, the High
Court took the position that although section 3 only expressly applied to domestic and
international arbitration with a seat in Malaysia, it did not expressly exclude the
application of the Act to international arbitrations with a seat outside Malaysia. As such,
the High Court was of the view that it retained the power under section 10 to stay
proceedings pending an international arbitration outside Malaysia.
In this regard, the High Court, in Innotec Asia supra at paragraph 46, inter alia, held:
Section 3 of the Arbitration Act 2005 merely dictates the application of certain
Parts in the Act to both domestic and international arbitrations, where the seat
P 15
of arbitration is in Malaysia. The language of the section is clear to this effect.
P 16 However, s. 3 of the Act does not expressly exclude the power of the court to

10
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 16
stay proceeding for the purpose of referring the dispute to international
arbitration. It is therefore incorrect and erroneous on the part of the plaintiff to
suggest that the Arbitration Act 2005, following s. 3, only applies to arbitration
(domestic or otherwise) where the seat is in Malaysia and excludes
international arbitration. The language of the section does not lend support to
such interpretation.
However, subsequently, the High Court, in Aras Jalinan Sdn Bhd v. Tipco Asphalt Public
Company Ltd & 2 Ors [2008] 4 AMR 59, declined to follow the reasoning in Innotec Asia
supra.
The High Court, in Aras Jalinan supra, instead held that since section 3 did not expressly
confer jurisdiction with respect to international arbitration with a seat outside Malaysia,
the High Court did not have such jurisdiction. The High Court accordingly refused to grant
an interim injunction under section 11 of the Arbitration Act 2005.
In this context, the High Court, in Aras Jalinan supra at paragraphs 20 and 25, inter alia,
held:
[20] The abovementioned provisions refers specifically to two broad categories
of arbitrations and awards to which the Act applies: By virtue of 3(2), in respect
of a domestic arbitration where the seat of arbitration is in Malaysia and in 3(3),
in respect of an international arbitration where the seat of arbitration is in
Malaysia. In short the Act applies to domestic and international arbitrations
where the seat of arbitration is in Malaysia. The Act is silent on a third category,
viz. in respect of an international arbitration where the seat of arbitration is
outside Malaysia. The specific reference to the abovementioned categories of
arbitrations to which the Act applies suggests that the Act does not apply in any
other circumstance.
…
[25] The repeal of the Arbitration Act 1952 and the enactment of the current Act
clearly indicate a deliberate intention to move away from the English model to
Model Law. Had Parliament intended, it would have incorporated Article 1(2) of
Model Law or the equivalent s 7 of the Arbitration Act of New Zealand 1996. The
New Zealand Act provides which sections, if any are applicable to foreign
arbitrations. New Zealand is one example of a jurisdiction that has adopted
Model Law and the relevant Article to confer express jurisdiction to courts
where the seat of arbitration is foreign. As Parliament has chosen to adopt the
arbitral regime of Model Law but not adopted Article 1(2) of Model Law, the
inescapable conclusion is that there is no intention of Parliament to confer such
jurisdiction.
This judgment was affirmed by the Court of Appeal.
Some of this uncertainty has been removed by the Arbitration (Amendment) Act 2011,
which came into force on 1 July 2011.
The Arbitration (Amendment) Act 2011 has amended sections 10 and 11 to expressly provide
that these sections will apply to an international arbitration with a seat outside Malaysia.
These amendments bring the Arbitration Act 2005 closer to the 1985 Model Law, which has
similar provisions in Article 1(2).
Unfortunately, the Arbitration (Amendment) Act 2011 did not similarly amend sections 38
and 39, which provide for recognition and enforcement of awards, to reflect the further
exceptions in Article 1(2) of the 1985 Model Law.
P 16
P 17
As a result, there remains some degree of uncertainty with respect to sections 38 and 39.
This issue was considered by the High Court, in Twin Advance (M) Sdn Bhd v. Polar Electro
Europe BV [2013] 3 CLJ 294 at paragraphs 23, 27. The High Court was of the view that although
section 3 only provided for the application of the Act to domestic and international
arbitration with a seat in Malaysia, sections 38 and 39 specifically allowed for the
recognition and enforcement of awards arising from an international arbitration with a
seat outside Malaysia.
Therefore, in the light of sections 10(4), 11(3), 38 and 39, it now appears that the Arbitration
Act 2005, like the 1985 Model Law intended, will only apply to domestic and international
arbitration with a seat in Malaysia save for exceptions with regard to stay, interim
measures and recognition and enforcement of awards.

§3.05 OPT-IN OR OPT-OUT

Sections 3(2)-(4) of the Arbitration Act 2005 are drafted to the effect that Parts I, II and IV
apply to domestic and international arbitration with a seat in Malaysia. Part III applies to
domestic arbitration unless the parties specifically agree to exclude this Part, which is
referred to in practice in short as ‘the opt-out’. On the other hand, Part III does not apply to
international arbitration unless the parties agree to include it, which is known as ‘the opt-

11
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 in’.
This has been recognized by the High Court, in AV Asia Sdn Bhd v. Pengarah Kuala Lumpur
Regional Centre for Arbitration & Anor [2013] 10 CLJ 115 at paragraph 12, where it was, inter
alia, held:
Actually, from as early as s. 3(4), the parties to arbitration are given a choice as
to the application of Part III of the Act; and that choice extends even to whether
that application is in whole or in part. Part III concerns ‘additional provisions
relating to arbitration’ and it relates to matters such as consolidation of
proceedings and concurrent hearings; determination of preliminary point of law
by court; reference of questions of law; appeal; costs and expenses of an
arbitration; extensions of time for commencing arbitration proceedings and
award.
Similarly, the High Court, in MMC Engineering Group Bhd & Anor v. Wayss & Freytay (M) Sdn
Bhd [2015] 10 MLJ 689 at paragraph 16, inter alia, held:
Section 42 of the Arbitration Act 2005 is peculiar to the Malaysian arbitration
scene. This recourse to the courts is available in all domestic arbitrations unless
the parties have specifically opted out of its operation; and unavailable to
international arbitrations unless the parties have specifically opted in to its
application. This is clear from the provisions of s 3. Section 42 was amended in
2011 to introduce sub-s 42(1A).
This was confirmed by the Federal Court, in Tan Sri Dato’ Seri Vincent Tan supra at
paragraphs 52 and 54, where it was, inter alia, held:
[52] Undeniably, in the present case all the parties agreed that the Submission
Agreement shall be governed by and construed in accordance with the laws of
Malaysia. This must of necessity mean that the Act applies. Nonetheless, it must
P 17 also be understood that the applicability or otherwise of Part III thereof must
P 18 be a matter of the particular provisions of the Act, which excludes the
applicability of Part III (which section 42 is found), to international arbitrations
as defined in the Act unless the parties to an arbitration agreement agree
otherwise in writing.
…
[54] Based on the clear and unambiguous language of sections 2 and 3 of the
Act, it is plain for us to see that Part III (including section 42) is expressly
excluded for international arbitration (with no exceptions) unless the parties
otherwise agree in writing … .
The courts explained the ‘opt-in’ and ‘opt-out’ principles in MMC Engineering and Tan Sri
Dato’ Seri Vincent Tan supra by reference to section 42 of the Arbitration Act 2005. These
principles continue to apply based on section 3. However, section 42 has been deleted by
the Arbitration (Amendment) (No 2) Act 2018.
P 18
P 19

3A. Representation
Unless otherwise agreed by the parties, a party to arbitral proceedings may be represented in
the proceedings by any representative appointed by the party.

§3A.01 Introduction
Section 3A of the Arbitration Act 2005 allows a party to be represented by any person of
their choice regardless of such persons’ qualifications or admission to practise in Malaysia
as an advocate and solicitor. Section 3A of the Arbitration Act 2005 has no equivalent in the
1985 Model Law. Section 3A was introduced by the Arbitration (Amendment) (No 2) Act 2018.

§3A.02 Purpose
Prior to the introduction of section 3A of the Arbitration Act 2005, the position on party
representation differed between Malaya, on the one hand, and Sabah and Sarawak on the
other. This difference arose from there being separate Bars for Malaya, Sabah and
Sarawak. Each of these Bars is in turn regulated by a different statute. The Bar in Malaya is
governed by the Legal Profession Act 1976, while the Bar in Sabah is governed by the
Advocates Ordinance 1953 and Sarawak by a distinct Advocates Ordinance 1953.
Insofar as Malaya is concerned, the position has always been that a party may be
represented by a person who is not admitted as an advocate and solicitor in Malaysia. This
was confirmed by the High Court, in Zublin Muhibbah Joint Venture v. Government of
Malaysia [1990] 3 CLJ Rep 371 at pages 373 and 374, where it was, inter alia, held:
An advocate and solicitor who is a qualified person under s 36(1) is given
exclusive right by the law to appear and plead in all Courts of Justice in

12
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Malaysia. This s 36(1) does not give exclusive right to him, nor prohibit him from
appearing in other tribunals which are not Courts of Justice in this country. An
unauthorised person is prohibited under pain of penalty from performing any of
the acts mentioned in s 37 of the Act. However, s 37 of the Act is specified in the
sense that those acts to be performed must be done in the Courts in Malaysia,
or relating to any proceedings in any Court in Malaysia.
An arbitral forum is not a Court of Justice in Malaysia as envisaged by the Legal
Profession Act 1976. It is a private tribunal. Subject to s 12 of the Arbitration Act
1952, the arbitrator is appointed by the parties to an arbitration agreement to
adjudicate on certain specific facts before him, and ultimately to settle the
disputes between the contracting parties arising out of their contract. The
parties who may appear before the arbitrator are those provided for by the
arbitration agreement, or if the agreement does not so provide, then the
provisions of s 13 of the Arbitration Act shall apply. Any person who assists a
party in presenting his case may also attend, e.g., a shorthand writer, an
assessor, an engineer, an architect, and such parties should not be excluded
without good ground when their presence are desired by a party or the award of
the arbitrator may be set aside.
P 19
P 20
This was later given statutory force in Malaya by the Legal Profession (Amendment) Act
2013, which introduced section 37A. Section 37A expressly provides that provisions
prohibiting a person other than an advocate and solicitor from practising in Malaya in
sections 36 and 37 of the Legal Profession Act 1976 shall not apply to arbitral proceedings:
37A Sections 36 and 37 not to apply to arbitral proceedings
(1) Sections 36 and 37 shall not apply to-
(a) any arbitrator lawfully acting in any arbitral proceedings;
(b) any person representing any party in arbitral proceedings; or
(c) any person giving advice, preparing documents and rendering any
other assistance in relation to or arising out of arbitral proceedings
except for court proceedings arising out of arbitral proceedings.
(2) In this section, ‘arbitral proceedings’ means proceedings in an arbitration
which is governed by the Arbitration Act 2005 [Act 646] or would have been
governed by such Act had the seat of arbitration been Malaysia.
However, the position in Sabah was different. Only an advocate admitted to practise in
Sabah was entitled to represent a party in arbitral proceedings based on sections 2(1) and
8(1) of the Advocates Ordinance 1953. This was confirmed by the Federal Court, in Samsuri
Baharuddin & Ors v. Mohamed Azahari Matiasin & Another Appeal [2017] 3 CLJ 287 at
paragraph 35, where it was, inter alia, held:
In our view, by virtue of the first limb of s 8(1) of the Ordinance, the Sabah
advocates have exclusive right to represent a party in arbitration proceedings
in Sabah. This statutory right given to the Sabah advocates cannot be taken
away by relying merely on the fact that barristers and solicitors in England have
non-exclusive right to appear for parties in arbitration proceedings, which
should form part of the functions included in the expression phrase ‘to practise
in Sabah’. We therefore agreed with the conclusion of the High Court Judge that
foreign lawyers who are not advocates within the meaning of the Ordinance are
prohibited by the same from representing parties to arbitration proceedings in
Sabah.
Based on Samsuri Baharuddin supra, a similar position would have applied in Sarawak, as
sections 2(1) and 8(1) of the Sarawak Advocates Ordinance 1953 are in pari materia to
sections 2(1) and 8(1) of the Sabah Advocates Ordinance 1953.
The differing positions between Malaya and Sabah and Sarawak have now been overcome
by section 3A of the Arbitration Act 2005. Section 3A expressly allows a party to be
represented by any person of their choice regardless of whether they have been admitted
as an advocate and solicitor in Malaya, Sabah or Sarawak.
P 20
P 21

4. Arbitrability of Subject Matter

(1) Any dispute which the parties have agreed to submit to arbitration under an arbitration
agreement may be determined by arbitration unless the arbitration agreement is
contrary to public policy or the subject matter of the dispute is not capable of
settlement by arbitration under the laws of Malaysia.
(2) The fact that any written law confers jurisdiction in respect of any matter on any court
of law but does not refer to the determination of that matter by arbitration shall not, by
itself, indicate that a dispute about that matter is not capable of determination by
arbitration.

13
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 §4.01 INTRODUCTION
Section 4 of the Arbitration Act 2005 provides for the arbitrability of the subject matter of
an arbitration agreement. Essentially, all matters are arbitrable unless they are contrary to
public policy. Furthermore, merely because any other statute provides for a dispute to be
resolved by the courts, this does not necessarily mean that such a dispute cannot be
resolved by arbitration.
Section 4(1) was amended by the Arbitration (Amendment) (No 2) Act 2018 to include the
words ‘or the subject matter of the dispute is not capable of settlement by arbitration
under the laws of Malaysia’. Section 4(1) was amended because there was some ambiguity
previously as to whether a dispute may not be submitted to arbitration only when the
arbitration agreement, as opposed to the subject matter of the dispute, was contrary to
public policy. The amendment seeks to remove this ambiguity by expressly providing that
a dispute may not be referred to arbitration where the agreement is contrary to public
policy or the subject matter of the dispute is incapable of settlement by arbitration.
Section 4(2) corresponds to Article 1(5) of the 1985 Model Law, but the two provisions are
quite different. Article 1(5) provides that ‘This Law shall not affect any other law of this
State by virtue of which certain disputes may not be submitted to arbitration or may be
submitted to arbitration only according to provisions other than those of this Law.’
Article 1(5) and section 4(2) take a different approach. While Article 1(5) provides that any
other Law of the State which prevents disputes from being submitted to arbitration will not
be affected by the 1985 Model Law, section 4(2) provides that any other statute that refers
to the resolution of disputes by the courts will not prevent the resolution of such disputes
by arbitration.
Generally, the Arbitration Act 2005 appears to take a broader perspective on the
arbitrability of the subject matter of the dispute, as compared to the 1985 Model Law.
There is no requirement under the Arbitration Act 2005 for the arbitration to be
commercial in nature. This in itself increases the scope of the arbitrability of the subject
matter under the Act considerably.
P 21
P 22

§4.02 CONTRARY TO PUBLIC POLICY

One of the two express restrictions is an arbitration agreement that is contrary to public
policy. The Federal Court, in Arch Reinsurance Ltd v. Akay Holdings Sdn Bhd [2018] MLJU 2117
at paragraphs 63-67, held that there was no universally accepted test as to what ‘public
policy’ was. However, there were recognized categories of disputes that could not be
resolved by arbitration. For example, a dispute will not be arbitrable if:
(1) the dispute involves an issue of public policy;
(2) the dispute involves an issue of public rights;
(3) the dispute involves the interests of third parties; or
(4) the dispute is covered by a statute which provides for access to the courts.
In particular, the Federal Court, in Arch Reinsurance supra, held that any dispute arising
from a chargee’s statutory demand on a chargor under a registered charge would not be
arbitrable, as an arbitration agreement could not take away the right of a registered
chargee to apply to the courts for an order for sale of the charged land under the National
Land Code 1965, in the event the chargor failed to comply with the chargee’s statutory
demand.
The Federal Court, in Arch Reinsurance supra, emphasized that the National Land Code 1965
was a complete and comprehensive code governing the tenure of land in Malaysia. In
particular, the provisions of the National Land Code 1965 setting out the rights and
remedies of parties under a statutory charge over land are exhaustive and exclusive, and
any attempt at contracting out of these rights would be void as being contrary to public
policy.

§4.03 NOT CAPABLE OF SETTLEMENT BY ARBITRATION

The second restriction is against disputes, the subject matter of which is not capable of
settlement by arbitration under the laws of Malaysia. This would apply to disputes that
cannot be resolved by arbitration in Malaysia, for example criminal matters.
P 22
P 23

5. Government to Be Bound
This Act shall apply to any arbitration to which the Federal Government or the Government of
any component state of Malaysia is a party.

§5.01 COMMENTARY
Section 5 of the Arbitration Act 2005 simply provides that the Act will apply to an

14
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitration to which the Federal or State Governments are party, which appears self-
evident. There does not appear to be any corresponding provision to this section in the
1985 Model Law.
In cases involving Government departments or state Governments, the High Court has
referred to this section to confirm the application of the Arbitration Act 2005 to
arbitrations to which the Government is a party. In this context, reference may be made to
the judgments of the High Court, in Pendaftar Pertubuhan Malaysia v. Establishmen Tribunal
Timbangtara Malaysia & Ors [2011] 6 CLJ 684 at paragraph 20 and David Liew Kong Ming
(practicing as D Liew Architect) v. Government of the State of Sabah (HC, 24 December 2010).
P 23

References
1) See also Albilt Resources Sdn Bhd v. Casaria Construction Sdn Bhd [2010] 3 MLJ 656 at
paras 63-64, 67-69, CA.
2) See Analytical Commentary, Article 2, commentary 1.
3) See Analytical Commentary, Article 1, commentary 23.
4) See Analytical Commentary, Article 1, commentary 24.
5) See Analytical Commentary, Article 1, commentary 25.
6) See Analytical Commentary, Article 1, commentary 25.
7) See Analytical Commentary, Article 1, commentary 26.
8) See Analytical Commentary, Article 1, commentary 27.
9) See Analytical Commentary, Article 1, commentary 28.
10) See Analytical Commentary, Article 1, commentary 29.
11) See Analytical Commentary, Article 1, commentary 30.
12) See Analytical Commentary, Article 1, commentary 32.
13) See Emmanuel Gaillard and John Savage, Fouchard, Gaillard, Goldman on International
Commercial Arbitration (Kluwer Law International 1999) at para. 11.
14) See Analytical Commentary, Article 2, commentary 3.
15) See Analytical Commentary, Article 1, commentary 22.
16) See Dr Peter Binder, International Commercial Arbitration and Conciliation in Model Law
Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 1-029.

15
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 1: General Provisions
Publication 6. Receipt of Written Communications
Arbitration in Malaysia: A (1) Unless otherwise agreed by the parties –
Commentary on the
Malaysian Arbitration Act (a) a written communication is deemed to have been received if it is delivered to the
addressee personally or if it is delivered at his place of business, habitual
residence or mailing address; and
Jurisdiction (b) where the places referred to in paragraph (a) cannot be found after making a
reasonable inquiry, a written communication is deemed to have been received if it
Malaysia is sent to the addressee’s last known place of business, habitual residence or
mailing address by registered post or any other means which provides a record of
the attempt to deliver it.
Bibliographic reference (2) Unless otherwise agreed by the parties, a written communication sent electronically is
'Chapter 1: General deemed to have been received if it is sent to the electronic mailing address of the
Provisions', in Thayananthan addressee.
Baskaran , Arbitration in (3) The communication is deemed to have been received on the day it is so delivered.
Malaysia: A Commentary on (4) This section shall not apply to any communications in respect of court proceedings.
the Malaysian Arbitration
Act, (© Kluwer Law §6.01 INTRODUCTION
International; Kluwer Law
International 2019) pp. 25 - Section 6 of the Arbitration Act 2005 provides for the means of service of documents.
44 Section 6 mirrors Article 3 of the 1985 Model Law save for section 6(2), which is an addition.
P 25
P 26

§6.02 AUTONOMY
Section 6 of the Arbitration Act 2005 is a non-mandatory provision, as it begins with the
words ‘unless otherwise agreed by the parties’. In practice, the parties would have often
agreed otherwise, in this context, by adopting a set of arbitration rules, which usually
provide for means of service.
In this regard, Article 2 of the 2013 UNCITRAL Arbitration Rules, which form part of the 2018
AIAC Arbitration Rules, provides for means of service in similar terms:
Notice and Calculation of Periods of Time
1. A notice, including a notification, communication or proposal, may be
transmitted by any means of communication that provides or allows for a
record of its transmission.
2. If an address has been designated by a party specifically for this purpose
or authorised by the arbitral tribunal, any notice shall be delivered to that
party at that address, and if so delivered shall be deemed to have been
received. Delivery by electronic means such as facsimile or email may
only be made to an address so designated or authorised.
3. In the absence of such designation or authorisation, a notice is:
(a) Received if it is physically delivered to the addressee; or
(b) Deemed to have been received if it is delivered at the place of
business, habitual residence or mailing address of the addressee.
4. If, after reasonable efforts, delivery cannot be effected in accordance with
paragraphs 2 or 3, a notice is deemed to have been received if it is sent to
the addressee’s last known place of business, habitual residence or
mailing address by registered letter or any other means that provides a
record of delivery or of attempted delivery
5. A notice shall be deemed to have been received on the day it is delivered
in accordance with paragraphs 2, 3 or 4, or attempted to be delivered in
accordance with paragraph 4. A notice transmitted by electronic means is
deemed to have been received on the day it is sent, except that a notice
of arbitration so transmitted is only deemed to have been received on the
day when it reaches the addressee’s electronic address.
6. For the purpose of calculating a period of time under these Rules, such
period shall begin to run on the day following the day when a notice is
received. If the last day of such period is an official holiday or a non-
business day at the residence or place of business of the addressee, the
period is extended until the first business day which follows. Official
holidays or non business days occurring during the running of the period of
time are included in calculating the period.

§6.03 BROAD INTERPRETATION OF WRITTEN COMMUNICATION

16
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Article 3 of the 1985 Model Law does not define the words ‘written communication’.
However, reference to personal service, ‘mailing address’ and ‘registered letter’ suggested
that the type of written communication envisaged is the traditional letter.
P 26 To avoid this limited interpretation of written communication, section 6(2) of the
P 27 Arbitration Act 2005 expressly allows for electronic means of communication. This is
particularly important in the context of international arbitration, where most, if not all,
communication is done electronically for the speed and cost advantages.

§6.04 COURT PROCEEDINGS

Section 6(4) of the Arbitration Act 2005 provides that section 6 shall not apply to court
proceedings. This is because court proceedings have their own rules for communication as
set out in the Rules of Court 2012.
P 27
P 28

7. Waiver of Right to Object

A party who knows –
(a) of any provision of this Act from which the parties may derogate; or
(b) that any requirement under the arbitration agreement has not been complied with,
and yet proceeds with the arbitration without stating its objection to such non-
compliance without undue delay or, if a time limit is provided for stating that objection,
within that period of time, shall be deemed to have waived its right to object.

§7.01 INTRODUCTION
Section 7 of the Arbitration Act 2005 gives statutory force to the doctrine of waiver or
estoppel in the context of the derogable provisions of the Act and the arbitration
agreement. Section 7 is identical to Article 4 of the 1985 Model Law.
Section 7 of the Arbitration Act 2005 is similar to Article 32 of the 2013 UNCITRAL Arbitration
Rules, which form part of the 2018 AIAC Arbitration Rules. Article 32 of the 2013 UNCITRAL
Arbitration Rules, however, allows for the waiver of any provision of the Rules and the
arbitration agreement. This is understandable, in the context of arbitration rules, any
provision of which may be altered.

§7.02 REQUIREMENTS
The Analytical Commentary sets out four requirements for the application of Article 4 of
the 1985 Model Law, which are equally applicable to section 7 of the Arbitration Act 2005.

[A] Derogable Provision

First, (1) the waiver can only apply to a derogable provision of the Arbitration Act 2005 and
not to a non-derogable provision of the Act. In this regard, the non-derogable provisions of
the Act include:
(1) section 20, which requires the parties to be treated with equality;
(2) section 25(1), which provides for exchange of statements of claim and defence;
(3) sections 26(3)-(5), which provide for notice of hearings and communication of
documents;
(4) section 29, which provides for court assistance in taking evidence;
P 28
P 29
(5) section 32, which provides for settlement;
(6) sections 33(1), (2), (4) and (5), which provide that the award must be in writing, signed,
dated and state the seat;
(7) section 34, which provides for termination of the arbitral proceedings; and
(8) sections 35(1)-(3), which provide for correction of the award.
And, the derogable provisions of the Act include:
(1) section 6, which provides for modes of receipt of written communication;
(2) section 12, which provides that the parties are free to determine the number of
arbitrators;
(3) section 13(1), which provides that the parties may agree on the nationality of the
arbitrator;
(4) section 13(2), which provides for the procedure for the appointment of arbitrators;
(5) section 15, which provides for the procedure to challenge an arbitrator;
(6) section 17(2), which provides for the procedure for the appointment of substitute
arbitrators;
(7) section 17(3), which provides for the effect of an order or ruling by an arbitrator made
prior to the appointment of a replacement;

17
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (8) section 19, which provides for the power of an arbitrator to order interim measures;
(9) section 21, which provides that the parties are free to agree on the procedure to be
followed by the arbitrator subject to the other provisions of the Act;
(10) section 22, which provides for the place of arbitration;
(11) section 23, which provides for the commencement of arbitration;
(12) section 24, which provides for the language of arbitration;
(13) section 25(3), which provides for amendments or supplements to the claim or
defence;
(14) section 26(1), which provides for an oral hearing or documents-only arbitration;
(15) section 27, which provides for defaults by the parties;
(16) section 28, which provides for tribunal-appointed experts;
(17) section 30, which provides for the law applicable to the substance of the dispute;
(18) section 31(1), which provides for the making of an award by majority;
(19) section 35(4), which provides for an additional award;
(20) section 44, which provides for the costs and expenses of arbitration; and
(21) section 46, which provides for an extension of time for the making of an award.
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
P 29 Democratic Republic [2017] 6 AMR 219 at paragraph 215, emphasized that a party’s failure to
P 30 object to the other party’s non-compliance with a prescribed time period under the
Arbitration Act 2005 would result in the party losing the right to object:
The Arbitration Act 2005 by Sundra Rajoo and WSW Davidson at 171 proposed
that whether a jurisdictional issue could be later raised would depend on the
nature of the jurisdictional issue; see also A Guide to the UNCITRAL Model Law on
International Commercial Arbitration by Howard M. Holtzmann & Joseph E.
Neuhaus at 482-483]. Equally, if a party raises an out of time challenge but the
other party does not object to the lateness of the challenge, and the tribunal
rules on the plea, the other party cannot rely on the delay to prevent the High
Court from deciding the matter under art 16(3) [the equivalent of section 18(8) of
AA 2005]’ (Williams & Kawharu supra at 7.4.6). On the facts, even if the plea
under section 18(3) or (5) of AA 2005 were made out of time, the Appellants
could not rely on delay, which was not an issue during the arbitral proceedings,
to prevent the High Court from deciding the matter under Section 37 of AA 2005.
On the facts, where there was no objection to lateness, the Appellants could not
raise the ‘out of time’ argument. As such, we reject the ‘out of time’ argument.
With regards to the arbitration agreement, (2) a waiver will only apply to provisions of the
agreement that correspond to derogable provisions of the Arbitration Act 2005 and not to
the non-derogable provisions.

[B] Knowledge of Non-compliance

Second, a party must know of the non-compliance. The draft Model Law in the Analytical
Commentary was broader and allowed for a situation where ‘a party who knows or ought to
have known’. However, there were objections to the extension of the waiver doctrine to
constructive knowledge through the use of the words ‘ought to have known’. These words
were accordingly not included in the 1985 Model Law and are not found in section 7 of the
Arbitration Act 2005. It is important to keep this in mind when considering the second
condition of section 7 that what is required is knowledge of the non-compliance and not
merely constructive knowledge. (3)

[C] Failure to State Objection

Third, the party must have failed to state his objection without undue delay or within any
period provided for. Where a period is provided (4) for in the Arbitration Act 2005 or the
arbitration agreement, this should take precedence over the more general words ‘without
undue delay’.
P 30
P 31
[D] Proceeding with the Arbitration
Fourth, a party only loses his right to object when, without stating his objections, he
proceeds. The Analytical Commentary suggests (5) that the following would amount to
proceeding with the arbitration: (a) appearance at the hearing or (b) communication with
the arbitral tribunal or the other party. Mere inaction due to circumstance beyond a
party’s control is unlikely to amount to proceeding, for example if a party fails to
communicate due to a postal strike.

§7.03 EFFECT OF WAIVER

Where these four conditions are satisfied, and a party has waived his right to object, he will
not be allowed to raise this ground of objection in the subsequent arbitration proceedings.

18
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Perhaps, more importantly, he will also not be entitled to raise such a ground in
attempting to set aside any subsequent award. Furthermore, where the award is sought to
be enforced in another jurisdiction that has also adopted the Model Law or a provision
similar to Article 4 thereof, a party will not be entitled to raise such a ground in objecting
to the recognition and enforcement of the award. (6)
P 31
P 32

8. Extent of Court Intervention

No court shall intervene in matters governed by this Act, except where so provided in this Act.

§8.01 INTRODUCTION
The present section 8 of the Arbitration Act 2005 was inserted by the Arbitration
(Amendment) Act 2011. Prior to the amendment, section 8 read as follows ‘Unless otherwise
provided, no court shall intervene in any of the matters governed by this Act.’
The present section 8 closely reflects Article 5 of the 1985 Model Law, which provides ‘In
matters governed by this Law, no court shall intervene except where so provided in this
Law.’

§8.02 INTERVENTION
The Analytical Commentary states (7) that Article 5 requires that any instance of court
involvement be listed out in the statute. This is intended to remove any residual powers of
the court, which are not listed, and thereby provides certainty.
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
Democratic Republic [2017] 6 AMR 219, confirmed that in accordance with section 8, a court
should only intervene in accordance with the Arbitration Act 2005. However, the Federal
Court emphasized that there was no question of the 1985 Model Law promoting more or
less court intervention. The Federal Court, in Thai-Lao supra at paragraph 240, inter alia,
held:
But that is not to say that the court has a free hand to intervene. Section 8 of AA
2005 provides that ‘No court shall intervene in matters governed by this Act,
except where so provided in this Act’. Unless so provided by AA 2005, the court
shall not intervene in the arbitral process or in arbitral awards. Whether the
UNCITRAL Model law promotes more or less curial interference does not arise.
Subsequently, the Court of Appeal, in La Kaffa International Co Ltd v. Loob Holding Sdn Bhd
and another appeal [2018] MLJU 703, appeared to go further, when the court held that
section 8 did not remove the inherent jurisdiction of the courts. However, the Court of
Appeal recognized that this inherent jurisdiction is limited, in matters governed by the
Arbitration Act 2005. In such matters, the courts in exercising their right to intervene, as
expressly provided by the Act, should do so in accordance with their inherent jurisdiction
but would be slow to go outside such express provisions. On the other hand, where the
matter was not governed by the Act, the courts retained their inherent jurisdiction. In this
P 32 context, the Court of Appeal, in La Kaffa International supra at paragraphs 21, 24 and 29,
P 33 held:
[21] It will not be a correct statement of law to say that the court has lost its
inherent jurisdiction to act on matters related to arbitration. The relevant
section which attempts to restrict the inherent jurisdiction of the court in
matters related to arbitration is section 8 of AA 2005 … .
…
[24] Section 8 is similar to Article 5 of the UNCITRAL Model Law. It is now trite
that section 8 advocates a minimum intervention and not no intervention at all
in matters specifically not governed by AA 2005. Support for the proposition is
also found in UNCITRAL Secretarial note 25-03-1985 which say:
4. Another important consideration in judging the impact in article 5 is that
the above necessity to list all instances of court involvement in the Model
Law applies only to the ‘matters governed by this Law.’ The scope of
article 5 is, thus, narrower than the substantive scope of application of the
Model Law, i.e. ‘international commercial arbitration’ (article 1), in that it
is limited to those issues which are in fact regulated, whether expressly or
impliedly, in the Model Law.
5. Article 5 would, therefore, not exclude court intervention in any matter not
regulated in the model law.
…
[29] In our view, the court under AA 2005 is not ousted of its inherent jurisdiction
or the powers to order interim measures order though by virtue of section 8, the
court will be slow to provide a relief if it is not clearly spelt out in AA 2005 itself
….

19
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 §8.03 EXPRESS AND IMPLIED PROVISION
However, there is a degree of uncertainty attached to the words ‘matters governed by this
Act’ in section 8 of the Arbitration Act 2005. This is because, on the one hand, section 8 is
not intended to cover the whole scope of arbitration but is limited to matters governed by
the Act. On the other hand, what is governed by the Arbitration Act 2005 covers both what is
‘in fact regulated, whether expressly or impliedly’. (8)
The Federal Court, in Far East Holdings Bhd & Anor v. Majlis Ugama Islam dan Adat Resam
Melayu Pahang [2017] 8 AMR 313, considered this issue and decided that section 8 would
not prevent court intervention in matters not regulated by the Arbitration Act 2005. The
Federal Court, in Far East supra at paragraph 114, inter alia, held:
The AA 2005 is devoid of a provision in the words of s 81(2) of the UK Arbitration
Act 1996. But the AA 2005 is nonetheless clear that ‘No court shall intervene in
matters governed by this Act, except where so provided in this Act’. Pertinent to
‘where so provided in this Act’, the AA 2005 provides for court intervention in the
matters stated in ss 10, 11, 13(7), 15(3), 18(8), 29, 37, 41, 42, 44(1), 44(4), 45, and 46
of the AA 2005. ‘Where a party seeks intervention is one of those situations, the
court is permitted to intervene only in the manner prescribed by the model law,
and in the absence of any express provision the court must not intervene at all.
P 33 By contrast, where the situation is not of a type to which the model law is
P 34 addressed, the court may intervene or decline to intervene in accordance
with the provisions of the relevant domestic arbitration law’ (A Guide to the
UNCITRAL Model Law on International Commercial Arbitration: Legislative History
and Commentary by Howard M Holtzmann and Joseph E Neuhaus, published in
1994 at p 224). Accordingly, s 8 would … not exclude court intervention in any
matter not regulated by (the AA 2005)’ (The Arbitration Act 2005 at p 8.17);
matters which are not governed by the Model Law include the following areas:
the inherent jurisdiction in the court to grant an injunction to stay arbitral
proceedings; and the whole topic of confidentiality of arbitral proceedings (for
a non-exhaustive list of matters not governed by the Model Law, see A Guide to
the UNCITRAL Model Law on International Commercial Arbitration at p 218).
At the end of the day, much will depend on the particular provision of the Act when
deciding whether a matter is implicitly provided for or not provided for at all. This issue is
also perhaps theoretical to an extent, as it has rarely arisen in practice, where the courts
have generally decided that matters are expressly governed by the Act and they must act
accordingly.
In this context, the provisions of the Arbitration Act 2005 that expressly allow for court
intervention include:
(1) section 10(1) – application for stay;
(2) section 11(1) – application for interim measures;
(3) section 13(7) – application for the appointment of an arbitrator, where the Director of
the AIAC fails to act;
(4) section 15(3) – application for a decision on an unsuccessful challenge against an
arbitrator;
(5) section 16(2) – application for a decision on termination of the mandate of an
arbitrator;
(6) section 18(8) – appeal against ruling that an arbitral tribunal has jurisdiction;
(7) section 29(1) – application for assistance in taking evidence;
(8) section 37(1) – application for setting aside;
(9) section 38(1) – application for recognition and enforcement;
(10) section 39(1) – grounds for refusing recognition or enforcement;
(11) section 41(1) – application for determination of the preliminary point of law;
(12) section 42(1) – reference on questions of law arising out of an award, which provision
has been deleted;
(13) section 44(1)(b) – application for taxation of costs, where arbitral tribunal does not
specify the amount of such costs;
(14) section 44(4) – application for delivery of the award, where the arbitral tribunal
refuses to deliver its award before payment of its fees and expense;
(15) section 45 – application for extension of time to commence arbitration proceedings;
and
(16) section 46(2) – application for extension of time for the making of an award.
P 34
P 35
We will now consider how the courts have applied section 8 in the context of these express
provisions of the Arbitration Act 2005.

[A] Section 10

20
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court, in Sunway Damansara Sdn Bhd v. Malaysia National Insurance Bhd & Anor
[2008] 3 MLJ 872 decided that, in the light of section 8, a stay must be granted under
section 10 unless one of the exceptions applied and there was no room for discretion. The
High Court, in Sunway Damansara supra at paragraphs 21 and 22, held that:
[21] In his final submissions counsel for the plaintiff referred to s 8 of the new
Act and submits that the said provision does not exclude the court from
intervening … However counsel for the second defendant submits that the said
provision clearly shows that the court shall not interfere. On this issue I am of
the opinion that the extent of the court’s power to intervene is limited to what
is expressed in the said provision, which is, unless the Act provides otherwise
the court cannot intervene, in the present case I find no ground to intervene.
[22] In conclusion I agree with what has been said by Ramly Ali J in Innotec’s
case that s 10(1) imposes upon the court an obligation to stay proceedings
unless the plaintiffs case falls within the words of the exception. I find that none
of the grounds put forward by the plaintiff come within the exceptions. That
being the case this is not a matter in respect of which the court has a discretion.
I therefore allowed the second defendant’s application as prayed.
The High Court, in CLLS Power System Sdn Bhd v. Sara-Timur Sdn Bhd [2015] 1 LNS 149 at
paragraph 31, held that the provisions of section 10 must be strictly complied with, in the
light of the amended section 8.
The High Court, in MMIP Services Sdn Bhd v. Overseas Assurance Corporation (Malaysia) Bhd
[2016] 5 CLJ 637, decided that section 8 did not apply in relation to the effect of an order
made by the courts. Section 10 would also not apply to issues relating to an order of the
courts, which could not be covered by an arbitration agreement. In this context, the High
Court, in MMIP Services supra at paragraph 54, held:
TIMB has relied on ss. 8 and 10 of the AA … Section 8 of the AA does not apply in
this case as this case does not concern AA. Section 10(1) of the AA only applies if
the arbitration agreement applies to the four questions. As explained above,
the arbitration agreement cannot apply to the question on effect of High Court’s
confirmation order. Consequently, s. 10(1) of the AA has no relevance to the third
party notice. Even if the arbitration agreement applies to the four questions,
TIMB can only apply to stay the third party proceedings under s. 10(1) of the AA
and not to strike out the third party notice.

[B] Section 11
P 35 The High Court, in Cobrain Holdings Sdn Bhd v. GDP Special Projects Sdn Bhd (HC, 29 October
P 36 2010), appears to emphasize that an application for an interim measure should properly
be made under section 11, in the light of section 8, rather than Order 29 of the Rules of the
High Court 1980, which was applicable at the time, or the inherent jurisdiction of the
courts. In this context, the High Court, in Cobrain Holdings supra at pages 5 and 6, held that:
At the outset, it has to be said that the reliance on Order 29 and the inherent
jurisdiction of this court was an alternative basis, and the Plaintiff did not
actively pursue its case on this basis, but more on Section 11 of the Arbitration
Act, 2005. Such an approach is consistent with Section 8 of the Act … This
preliminary position has to be emphasised since it encapsulates the principles
of party autonomy and minimalist intervention by the courts of law. From this
basic principal, a number of subsidiary principles arise which have a direct
bearing on the outcome of these cases.
As has been emphasised in numerous cases, when parties have contractually
resorted to arbitration as a forum of choice, the court of law should be slow to
interfere in the arbitration proceedings, and should do so only where the
governing statutory framework grants it the jurisdiction. Any necessary
application should first be made to the arbitral tribunal, unless of course the
particular jurisdiction happens not to be conferred on the arbitral tribunal
within the statutory framework. These principles are stated and emphasised in
the leading House of Lords decision in Channel Tunnel Group Ltd v. Balfour
Beatty Construction [1993] A.C. 334 … .
The High Court, in Metrod (Singapore) Pte Ltd v. GEP II Beteiligungs GmbH & Anor [2013] 5
AMR 186, decided that it does have the power to grant interim measures under section 11,
and in accordance with section 8, after the commencement of arbitration proceedings. In
this context, the High Court, in Metrod supra at paragraph 19, held:
It is observed that the orders sought here are not confined to the contracting
parties. This application may then be made to court without having first being
made to the arbitral tribunal. This was remarked in Cobrain Holdings Sdn Bhd v.
GDP Special Projects Sdn Bhd (KL High Court Originating Summons No. 24NCC-71-
2010 & Anor) citing with approval the Singapore decision of NCC International AB
v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR (R) 565. Bearing in mind the
intention of Parliament as reflected in s 8 of Act 646, it must be that the court

21
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 has jurisdiction to hear and grant interim measures even where arbitration has
already commenced elsewhere. The simple existence of arbitration cannot be a
bar to this application given the terms upon which this power is predicated.
The High Court, in Jayapadu Oil & Gas Sdn Bhd v. Chersonese Oil Sdn Bhd [2014] 5 AMR 716,
decided that although it was entitled to grant interim measures under section 11, this
power must be exercised in a manner supportive of the arbitration, bearing in mind the
minimalist intervention envisaged by section 8. In this context, the High Court, in Jayapadu
Oil supra at paragraph 18, held that:
Section 11 of Act 646 in itself does not state the test to be applied when
considering the particular application at hand. Be that as it may, it is
imperative that one is reminded of the autonomous nature of arbitration and
P 36 the application of s 8; the latter being a statutory pronouncement of the
P 37 minimalistic intervention of and by the court. Another factor to bear in mind
is that the object behind s 11 is to provide for some relief or measure during the
interim period from the initiation or invocation of arbitration to the rendering
of the award. In other words, the court’s role here is more supportive; to aid and
facilitate the arbitration which is the mode chosen by the parties to resolve
their dispute. That must include the element of ensuring that that mode is not
jeopardised, compromised or frustrated. That will also extend to any award that
may be rendered by the arbitral tribunal appointed or to be appointed under
the agreed arrangements; as may be gathered from the reliefs or measures that
may be sought from the High Court at this stage. At s 11(1)(g), the interim
measure may include orders that ensured that any award which is eventually
rendered by the arbitral tribunal is not rendered ‘ineffectual by the dissipation
of assets by a party’. Therefore, the remedies sought are intended to support
and even protect those intentions of the parties.
Similarly, the High Court, in Bumi Armada Navigation Sdn Bhd v. Mirza Marine Sdn Bhd
[2015] 5 CLJ 652 at paragraphs 46, 90, held that:
[46] I am mindful of s. 8 AA which embodies a ‘minimalist’ approach by our
courts as explained by David Wong JCA in the Court of Appeal case of Capping
Corporation Limited & Ors v. Aquawalk Sdn Bhd & Ors [2013] 1 LNS 574; [2013] 6
MLJ 579, at 588 and 589 … In my opinion, s. 11(1) AA expressly allows judicial
‘intervention’ in a very limited form – the court may grant interim (and not
permanent) relief pending the disposal of arbitration. The court’s power to
grant interim relief, does not:
(a) deprive parties of their freedom to contract and to agree to resolve disputes
by way of arbitration; and
(b) usurp the role and function of an ‘arbitral tribunal’ (defined in s. 2(1) AA as ‘a
sole arbitrator or a panel of arbitrators’) to decide the merits of the dispute in
question.
…
[90] To ensure that the arbitral tribunal has unfettered power to decide this
dispute as intended by the parties in the arbitration clause and in conformity
with the ‘minimalist’ approach embodied in s. 8 AA, this court states the
following:
(a) no finding of fact and/or law has been made by this court in court encl. no. 5
and OS as regards the merits of this dispute. The arbitral tribunal is free and is
indeed duty bound to decide solely the merits of this dispute. The arbitral
tribunal should not be influenced in any manner by this judgment … .
(b) pending the disposal of arbitration, the parties may apply to the arbitral
tribunal to vary this order as expressly allowed by this order. Both parties are,
of course, entitled to apply to this court to vary or discharge this order; and
(c) if the arbitral tribunal dismisses the plaintiff’s claim at the end of the
arbitral proceedings, the arbitral tribunal is empowered to enforce the
plaintiff’s undertaking and assess all loss and damage suffered by the
defendant as a result of the Mareva injunction granted in this order.
The Court of Appeal, in La Kaffa International supra at paragraph 29, held that section 8 did
not remove the court’s inherent jurisdiction to grant interim measures, but the courts
would be slow to provide relief not expressly provided for in section 11.
P 37
P 38
[C] Section 12
The High Court, in AV Asia Sdn Bhd v. Pengarah Kuala Lumpur Regional Centre for Arbitration
& Anor [2013] 10 CLJ 115 at paragraph 17, suggests that because section 12 does not allow
the courts to determine the number of arbitrators, the courts do not have the power to do
so in accordance with section 8.

22
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [D] Section 14
The High Court, in Sundra Rajoo v. Mohamed Abd Majed & Anor [2011] 6 CLJ 923 at paragraph
10(e), suggests that although section 14 only provides for a party to challenge an arbitrator
and not for a co-arbitrator to challenge another co-arbitrator, the court still had the
inherent jurisdiction to allow such a co-arbitrator’s challenge. This judgment was prior to
the Arbitration (Amendment) Act 2011 came into force on 1 July 2011 and materially altered
section 8. This judgment should accordingly now be read with caution.

[E] Section 18
The High Court, in AV Asia supra at paragraph 17, suggests that the question of the number
of arbitrators goes to the jurisdiction of the arbitral tribunal and should accordingly be
determined by the arbitral tribunal under section 18 without any intervention by the
courts in accordance with section 8.

[F] Section 37
The High Court, in Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporations Sdn Bhd
[2010] 5 CLJ 83, decided that the courts would not ordinarily interfere with awards under
section 37 of the Arbitration Act 2005, in the light of section 8. The High Court also
cautioned against the reliance on judgments based on the Arbitration Act 1952 in this
respect. The High Court, in Taman Bandar Baru supra at paragraphs 19 and 20, held:
[19] … The court’s jurisdiction to intervene is almost prohibited. The AA 2005
must be seen to be a new chapter to the law, practice, and intervention of court
etc in arbitration proceedings. The jurisdiction to ensure that courts do not
intervene and meddle with arbitration proceedings is clearly set out in various
provisions of the Act. Pre-2005 cases which provide room for interference with
arbitrator’s decision must now be treated as otiose, as AA 2005 has been
shrewdly worded to ensure that courts ordinarily do not interfere with
arbitration awards.
[20] I will say that draftsmen of provisions such as ss. 8, 9, 37 and 42 have with
great ingenuity asserted that court should not interfere with arbitrator’s award
without out rightly saying so. If they have said so out rightly, it will stand to be
unconstitutional. Thus, it will appear that it is going to be difficult to frame any
P 38 question of law pursuant to AA 2005 when the subject matter of complaint is one
P 39 which is restricted by ss. 9, 37, or 42 etc. It is now for the courts themselves to
restrain from interference unless it is a case of patent injustice which the law
permit the court in clear terms to intervene. It is trite that AA 2005 is meant to
promote one-stop adjudication … .
The High Court, in PT Permata Hijau Sawit & 2 Ors v. Pacifik Inter-Link Sdn Bhd [2011] 6 AMR
343 at paragraphs 32 and 34, decided that as section 8 allowed for intervention under a
specific provision of the Act, the courts were entitled to consider an issue when it was
raised under such a provision, like section 37. This is in accordance with the intention
behind section 8. However, the High Court went on to suggest that when considering such
an issue, the courts had ‘the inherent jurisdiction to do justice and examine the finding of
facts by the tribunal to see that the findings of facts are well supported by the evidence
presented to the tribunal’. This may perhaps be going a little beyond the boundaries set
by sections 8 and 37, especially as section 8 is intended to remove any residual power or
inherent jurisdiction of the courts on matters governed by the Act. Perhaps, in this regard,
this judgment can best be explained as having been made under section 8 prior to its
amendment, when it was unclear whether the inherent jurisdiction of the courts had been
removed. The position after the amendment to section 8 is clearly that such inherent
jurisdiction on matters governed by the Act is removed.
The High Court, in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Another Case [2013] 4
CLJ 1172, decided that, in the light of section 8, the courts would only intervene on matters
specifically set out in section 37. This is a concise and precise statement of the law on the
interplay between sections 8 and 37. The High Court, in Kelana Erat supra at paragraph 16,
held:
When read together with the prior provision of s. 8 which states that ‘Unless
otherwise provided, no court shall intervene in any of the matters governed by
this Act’ it would appear that there is a palpable paradigm shift and a
discernible difference where Arbitration under the 2005 Act is concerned
compared to the Arbitration Act 1952 in that the court would tend to take a
hands-off approach and would only intervene on matters specifically set out in
s. 37 where setting aside an award is concerned.
The High Court, in Twin Advance (M) Sdn Bhd v. Polar Electro Europe BV [2013] 3 CLJ 294,
decided that, in the light of section 8, an award made in a foreign state could not be set
aside in Malaysia. This decision is in accordance with established principles in
international arbitration, reflected in section 37, that an award will only be set aside at the
seat of arbitration. The High Court, in Twin Advance supra at paragraph 39, held:

23
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 … I am of the view that our s. 8 AA 2005 which is akin to Article 5 of the Model
Law as adopted by the AA 2005 should similarly be interpreted in line with the
Model Law that the court should exclude its general or residual powers or its
inherent jurisdiction to indirectly vary the substantive provisions of AA 2005
which does not categorically provide or intend so. The parties in the said
contract had chosen Singapore as the seat of arbitration and must be taken to
have chosen Singapore as the jurisdiction for any subsequent proceedings of
challenge to the award. They cannot resile to depart from this entrenched
principle accepted internationally relating to the seat of arbitration. Any
challenge or any application to set aside such a foreign award made in a foreign
state must be in the foreign state.
P 39
P 40
The Court of Appeal, in Kerajaan Malaysia v. Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ
617, decided that an application to set aside an award must be viewed against the
background of minimal intervention prescribed by section 8. In this context, the Court of
Appeal, in Perwira Bintang supra at paragraph 10, held:
… The policy to be adopted by our courts is that of minimal intervention
consistent with the policy underlying the UNCITRAL Model Law, which Malaysia
has incorporated with suitable amendments. Section 37 mirrors the Model Law
(Article 34). However, s. 42 has no direct equivalent provision in the Model Law.
Nevertheless, this court has to carefully consider whether we should strictly
construe and adhere to the principles of party autonomy, finality of arbitration
awards and minimal court intervention rigidly on the facts of this appeal, even
though in the context of a domestic arbitration. We have kept these issues
uppermost in mind, since the grounds advanced by Perwira Bintang and
addressed by the learned judge in the High Court, have brought these issues to
the fore.
The High Court, in Kluang Health Care Sdn Bhd v. Lee Yong Beng & Another Case [2016] 1 CLJ
281, similarly held that a minimalist approach, as provided for in section 8, would be taken
in applications to set aside. In this regard, the High Court, in Kluang Heath Care supra at
paragraph 31, held:
Section 8 of the Arbitration Act 2005 therefore clearly reminds the court of a
minimalistic approach when it comes to arbitration and arbitral awards; and
the courts have been extremely mindful of this caution. The parties have made
their choice for dispute resolution loud and clear; and the court is merely giving
effect to that choice. The court does not sit in appellate capacity over these
arbitral awards; hence the applicant’s complaints are a non-starter.
The Federal Court, in Far East supra at paragraph 115, held that, in the light of section 8, an
award would not be set aside for an error of law on the face of the award, as there was no
such ground in section 37:
… Since the setting aside of an award is a matter governed by the AA 2005, the
court is permitted to set aside an award only in manner prescribed by the AA
2005. The court is not permitted to set aside an award in manner not prescribed
by the AA 2005. ‘Error of fact or law on the face of the award’ is not prescribed as
a ground for court intervention. Hence, under the AA 2005, there is no
jurisdiction to set aside an award on the ground of ‘error of fact or law on the
face of the award’… .
Apart from a minimalist approach being taken when considering the grounds for setting
aside an award under section 37(1), the High Court has also relied on section 8 to hold that
the period for applying to set aside an award under section 37(4) is mandatory. The High
Court has held that such a period is mandatory, despite the use of the word ‘may’ in
section 37(4), which is usually interpreted to mean a statutory requirement is merely
directory and not mandatory. The High Court also relied on the express exceptions in
section 37(5) to interpret the period in section 37(4) as being mandatory, as such express
exceptions would not be required unless the period was mandatory.
P 40
P 41
In this context, the High Court, in JHW Reels Sdn Bhd v. Syarikat Borcos Shipping Sdn Bhd
[2013] 7 CLJ 249 at paragraph 19, held:
Having considered the submissions and the provisions in our Arbitration Act, I
tend to be of the view that on a proper reading of s. 37(4) the time limit
imposed is mandatory. This view accords with the generally accepted view that
under the Model Law, the time limit is strict and express power must be given
under the law itself before the court can extend time. This view also accords
with the principle of minimal intervention by the courts of law as strongly
underlined in our s. 8 of the Act. Support for this strict reading can be found
within the four corners of s. 37 itself. Unlike art. 34 of the Model Law which
provides no exceptions, our s. 37(5) provides two exceptions … .

24
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court, in Kembang Serantau Sdn Bhd v. JEKS Engineering Sdn Bhd [2016] 2 CLJ 427 at
paragraphs 29 and 30, held:
[29] … Sometimes, as it is the case here, the sentence construction simply does
not permit the use of the word ‘shall’; and the word ‘may’ is then used. This
usage does not detract from the basic object or intention of the provision which
is to require mandatory or strict compliance. More important is to revert to the
jurisprudence referred to in Government of the Lao People’s Democratic Republic
v. Thai-Lao Lignite Co Ltd & Anor, that the court adopts a minimalistic approach
when dealing with arbitration and arbitration related matters. Such an
approach does not spell a lack or want of jurisdiction of the court; but rather
that the court declines jurisdiction in such matters; giving effect to and
enforcing contractual obligations of the parties; the bedrock of the concept of
party autonomy.
[30] The significance of s. 8 cannot be overstated; that the court’s intervention is
only where it is so provided. The matters that may be referred to arbitration,
matters concerning procedure and the conduct of arbitrations, the role of the
arbitrators and the involvement of the court are all matters governed by the
Act. Where the provisions do not provide for the intervention of the court, the
court ought to decline intervention even if the court would treat the matter
differently if it was a non-arbitration matter. I am aware that this is quite a
liberal interpretation of s. 8 but given one of the basic principles of arbitration
is party autonomy especially in international commercial arbitration, I am
comfortable with that understanding. These matters are recognised as part of
the bargain entered into out of the parties’ own free will. Parliament has seen fit
to treat this lot of cases in a different manner. Absent fraud and the complaints
of corruption, I see no reason why such an approach is wrong or that the
jurisprudence and approach of other like-minded Model Law jurisdictions are
not persuasive.
These two judgments of the High Court are despite the earlier judgment of the Court of
Appeal, in Government of The Lao People’s Democratic Republic v. Thai-Lao Liqnite Co Ltd &
Anor [2011] 1 LNS 1903 at paragraphs 14 and 16, where it was, inter alia, held that the courts
had an unfettered discretion to extend time based on the use of the word ‘may’ in section
37(4) of the Arbitration Act 2005, and item 8 of the Schedule to the Courts of Judicature Act
1964, as well as Order 3 Rule 5(1) and (2) of the then Rules of the High Court 1980, which has
been deleted in the Rules of Court 2012:
[14] On the issue of jurisdiction, this court is in agreement with the learned High
P 41 Court judge, that the High Court has the jurisdiction to grant an extension of
P 42 time to set aside an arbitral award, based on the wording of section 37(4) of
the Arbitration Act 2005. The court has an unfettered discretion to grant an
extension of time. The court may extend such period of time although the
application is only made after the expiration of the said period. This is
supported by item 8 of the schedule to Courts of Judicature Act 1964 which
empowers the court to enlarge or abridge the time prescribed by any written
law for doing any act or taking any proceeding, although any application
therefore is not made until after the expiration of the time prescribed. Order 3
Rule 5(1) and (2) of the Rules of the High Court 1980, also provides for the same
power to the court.
…
[16] In an application for extension of time of this nature, the court needs to
consider the following factors:
(a) the length of the delay;
(b) the reason for the delay;
(c) the prospect of success; and
(d) the degree of prejudice to the Respondents if the applications is granted.
The High Court, in Dato’ Dr Muhammad Ridzuan Mohd Salleh & Anor v. Syarikat Air
Terengganu Sdn Bhd [2012] 6 CLJ 156 at paragraph 20, had similarly held that the courts
retained a discretion to extend the time to apply to set aside an award:
It was submitted by the plaintiffs that this court has the discretion to extend
time for the application to set aside an award beyond the 90 days period as the
word used is ‘may’ and not ‘shall’. I agree that there is a discernible difference
between a peremptory ‘shall’ and a permissive ‘may’. The former is mandatory
whereas the latter is not. The former takes away any discretion for extension of
time for instance whereas the latter leaves some room for the exercise of
discretion to extend time in the context of a time frame to do a particular act.
Parliament could have used the word ‘shall’ if they had wanted to as ‘shall’ is
used in the context of a time frame to make an application in s. 42(2) of the Act
….

25
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 However, the Court of Appeal allowed an appeal against this judgment, in Syarikat Air
Terengganu Sdn Bhd v. Dato Dr Muhammad Ridzuan Mohd Salleh & Anor [2013] 1 LNS (0) 1.
The grounds of the judgment of the Court of Appeal are not available.
It is submitted that the better view is that the courts do not have the inherent jurisdiction
to extend the time for an application to set aside an award. Section 8 removes any such
inherent jurisdiction. The judgment in Thai-Lao Lignite supra can perhaps best be
explained as being prior to the amendment to section 8 and hence is unlikely to be still
applicable.

[G] Section 39
The High Court, in Murray & Roberts Australia Pty Ltd v. Earth Support Company (SEA) Sdn
Bhd [2015] 6 CLJ 649 at paragraph 62, decided that, in the light of the minimalist approach
provided for in section 8, a party could only rely on a ground set out in sections 39(1)(a) and
(b) in resisting the enforcement of an award.
P 42
P 43
[H] Section 42
Section 42 of the Arbitration Act 2005 has been deleted by section 12 of the Arbitration
(Amendment) (No 2) Act 2018. This section explains how the courts interpreted section 42
when it was in force, in the light of section 8.
As stated above, in the context of section 37, the High Court, in Taman Bandar Baru supra at
paragraphs 19 and 20, decided that the courts would not ordinarily interfere with awards,
in the light of section 8. This applies equally to section 42, which was also addressed in
Taman Bandar Baru supra.
The Court of Appeal, in SDA Architects v. Metro Millenium Sdn Bhd [2014] 3 CLJ 632 at
paragraph 47(a), affirmed the position taken in Taman Bandar Baru supra that section 8
almost prohibited intervention in relation to an award unless specifically allowed by
section 42.
The High Court, in Telekom Malaysia Berhad v. Eastcoast Technique (M) Sdn Bhd & Another
Case [2014] 6 CLJ 1067, similarly decided that, in the light of section 8, the courts would be
reluctant and would rarely intervene under section 42. The High Court, in Telekom Malaysia
supra at paragraph 40(iv), held:
It must be said that the High Court is very slow, and indeed reluctant to
intervene in arbitration awards. The cases in which the court exercises its
powers of intervention are expressly restricted as provided by s. 8 of the Act. As
such it is only in rare cases that the court will intervene in an arbitration award.
But as set out in the test in relation to s. 42 above, a clear error of law or
misapplication of the law to the fact, as in the instant case warrants a
rectification of the law. This is also a case where the rights of one of the parties,
ie, Telekom has been substantially affected. But of utmost importance is the
need to ensure that the law in relation to undue influence remains intact and is
correctly applied.
This is also reflected in the judgment of the High Court, in Tune Insurance Malaysia Bhd &
Anor v. Messrs K Sila Dass & Partners [2015] 9 CLJ 93 at paragraph 63.
As stated above, the Court of Appeal, in Perwira Bintang supra at paragraph 10, decided
that the minimalist approach prescribed by section 8 would be kept in mind when
considering applications under section 37. This also applies to section 42. Perhaps, even
more strongly, because section 42 is not found in the 1985 Model Law, as pointed out by the
Court of Appeal.
However, the foregoing authorities should be read in the light of the judgment of the
Federal Court, in Far East supra at paragraph 66, which emphasizes that section 42 should
be applied as it stands without restrictions:
The proper test is ‘substantially affects the rights of one or more of the parties’.
The test of illegality stated in Cairns Energy, of patent injustice stated in Ajwa
Food Industries and of manifestly unlawful and or unconscionable or perverse in
Kerajaan Malaysia v. Perwira Bintang, do not conform to s 42 which should be
read as it stands. The language of a statute should not be substituted with other
words … .
P 43
P 44
[I] Section 44
The High Court, in Magnificient Diagraph Sdn Bhd v. JWC Ariatektura Sdn Bhd [2009] 1 LNS
622, decided that, in the light of section 8, the courts would not interfere with the
determination of costs, which was within the jurisdiction of the arbitral tribunal under
section 44. The High Court, in Magnificient Diagraph supra at paragraph 4(b), held:

26
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 From the reading of the said section, it is clear that the jurisdiction to
determine costs vests with the arbitrator. Courts will not ordinarily interfere
with the jurisdiction of the arbitrator. In addition, in contrast to the Arbitration
Act 1952, the AA 2005 restricts undue interference of the court in the arbitral
process. This is reflected in section 8 of AA 2005 … .
P 44

References
1) See Analytical Commentary, Article 4, commentary 2.
2) See Analytical Commentary, Article 4, commentary 2.
3) See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at paras 1-093-1-094.
4) See Analytical Commentary, Article 4, commentary 4.
5) See Analytical Commentary, Article 4, commentary 5.
6) See Analytical Commentary, Article 4, commentary 6.
7) See Analytical Commentary, Article 5, commentary 2.
8) See Analytical Commentary, Article 5, commentary 4.

27
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 2: Arbitration Agreement
Publication 9. Definition and Form of Arbitration Agreement
Arbitration in Malaysia: A (1) In this Act, ‘arbitration agreement’ means an agreement by the parties to submit to
Commentary on the arbitration all or certain disputes which have arisen or which may arise between them in
Malaysian Arbitration Act respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in an agreement
or in the form of a separate agreement.
Jurisdiction
(3) An arbitration agreement shall be in writing.
Malaysia (4) An arbitration agreement is in writing -
(a) if its content is recorded in any form, whether or not the arbitration agreement or
Bibliographic reference contract has been concluded orally, by conduct, or by other means; or
(b) if it is contained in an exchange of statement of claim and defence in which the
'Chapter 2: Arbitration existence of an agreement is alleged by one party and not denied by the other.
Agreement', in Thayananthan (4A) The requirement that an arbitration agreement be in writing is met by any electronic
Baskaran , Arbitration in communication that the parties make by means of data message if the information
Malaysia: A Commentary on contained therein is accessible so as to be useable for subsequent reference.
the Malaysian Arbitration
Act, (© Kluwer Law (5) A reference in an agreement to a document containing an arbitration clause shall
International; Kluwer Law constitute an arbitration agreement, provided that the agreement is in writing and the
International 2019) pp. 45 - reference is such as to make that clause part of the agreement.
100 (6) For the purpose of this section, ‘data message’ means information generated, sent,
received or stored by electronic, magnetic, optical or similar means, including, but not
limited to, electronic data interchange, electronic mail, telegram, telex or telecopy.
P 45
P 46

§9.01 INTRODUCTION
Section 9 of the Arbitration Act 2005 defines an arbitration agreement, which is the
premise of any arbitration, and the source of the arbitral tribunal’s jurisdiction. Section
9(1) provides for the substance of an arbitration agreement, while sections 9(2)-(5) deal
with matters of form.
Section 9 of the Arbitration Act 2005 reflects Option I Article 7 of the 2006 Model Law save
for minor differences in drafting.
Option I Article 7 of the 2006 Model Law in turn reflects Article II(1) and (2) of the 1958 New
York Convention, which provides:
1. Each Contracting State shall recognize an agreement in writing under
which the parties undertake to submit to arbitration all or any differences
which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not, concerning a
subject matter capable of settlement by arbitration.
2. The term ‘agreement in writing’ shall include an arbitral clause in a
contract or an arbitration agreement, signed by the parties or contained
in an exchange of letters or telegrams.
Option I Article 7 of 2006 Model Law is based on Articles II(1) and (2) of 1958 New York
Convention because, by adopting the definition of an arbitration agreement in the
Convention, there is an implied guarantee of recognition of such an arbitration agreement
in the more than 150 countries that are party to the Convention. (1)
Section 9 of the Arbitration Act 2005 was amended by the Arbitration (Amendment) (No 2)
Act 2018. The amendments were to substitute section 9(4) and insert the new sections 9(4A)
and (6). These amendments were to bring the Arbitration Act 2005 in line with the 2006
Model Law. The amendments are primarily to allow for arbitration agreements that are
recorded by way of electronic communication.
Prior to these amendments, section 9(4) read as follows:
An arbitration agreement is in writing where it is contained in –
(a) a document signed by the parties;
(b) an exchange of letters, telex, facsimile or other means of communication
which provide a record of the agreement; or
(c) an exchange of statement of claim and defence in which the existence of
an agreement is alleged by one party and not denied by the other.

§9.02 THE SUBSTANCE OF AN ARBITRATION AGREEMENT

28
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Section 9(1) of the Arbitration Act 2005, which reflects Article 7(1) of Option I of the 2006
Model Law and Article II(1) of the 1958 New York Convention, deals with the substance of
the arbitration agreement.
P 46
P 47
There are two elements to this definition of an arbitration agreement, which are that the
arbitration agreement may cover all or certain dispute:
(1) which have arisen or may arise; and
(2) in respect of a defined legal relationship, whether contractual or not.
We will consider these two elements below.

[A] Existing and Future Disputes

The first element of the definition is intended to cover an arbitration agreement with
respect to existing disputes (i.e., a compromis) as well as disputes that may arise in the
future (i.e., a clause compromissoire). The second type of arbitration agreement is the one
more frequently encountered in practice. Its inclusion in the definition in Article 7(1) of
Option I of the 2006 Model Law is because at the time certain national laws did not
recognize an arbitration agreement to refer future disputes to arbitration. (2) This type of
arbitration agreement has, however, always been recognized in Malaysia.

[B] Defined Legal Relationship

The second element is that an arbitration agreement may cover a dispute arising from a
defined legal relationship, whether contractual or not. This wide definition of an
arbitration agreement in section 9(1), coupled with the absence of any restriction to
commercial arbitration in section 3 and the broad concept or arbitrability in section 4,
gives the Arbitration Act 2005 a particularly large scope.
An arbitration agreement may, therefore, cover disputes that arise from certain relations
resembling those of contract under Part VI of the Contracts Act 1950, in particular with
regards to disputes on claims for unjust enrichment and quantum meruit under section 71
of the Contracts Act 1950. Furthermore, an arbitration agreement may cover disputes
arising from a claim in tort.
More widely still, the Analytical Commentary takes the position that ‘defined legal
relationship’ should be given a wide interpretation so as to include all non-contractual
commercial cases occurring in practice, as for example a third party interfering with
contractual relations, an infringement of trademark or other unfair competition. (3) This
would be even wider under the Arbitration Act 2005, as it is not restricted to commercial
cases.
This wide definition of an arbitration agreement under section 9 of the Arbitration Act 2005
has been recognized by the courts. For example, the High Court, in Taman Bandar Baru
P 47 Masai Sdn Bhd v. Dindings Corporation Sdn Bhd [2010] 5 CLJ 83 at paragraph 19, inter alia,
P 48 held:
This section gives a wider meaning to the definition and form of arbitration
agreement unlike the previous Act. For example, the inclusion of the phrase,
‘whether contractual or not’, in s. 9 gives wider jurisdiction to the arbitrator to
even cover a dispute arising out of tort. In essence, this section gives or
attempts to give wider jurisdiction to the arbitrator to deal with all issues
relating to the parties which arises in consequence of the arbitration
agreement. Thus, parties to the arbitration cannot complain that the arbitrator
has exceeded his jurisdiction by simply relying on Pre-AA 2005 cases … .
Similarly, the High Court, in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Another Case
[2013] 4 CLJ 1172 at paragraphs 36 and 37, inter alia, held:
[36] The more expansive and extensive definition of an ‘arbitration agreement’
under the 2005 Act justifies such a practical approach in promoting arbitration
as a one-stop centre to resolve any and every dispute arising out of or under an
Agreement … .
[37] As can be seen the solutions to be provided by an arbitration under the
2005 Act are intended to be comprehensive and conclusive, full and final. The
rather more restrictive definition of an ‘arbitration agreement’ under the 1952
Act in s. 2 thereof ‘means a written agreement to submit present or future
differences to arbitration, whether the arbitrator is named therein or not’.
The High Court has also given a broad meaning to linking words such as ‘in relation to’, ‘in
connection with’ or ‘arising under’, which are frequently found in arbitration agreements.
The High Court has decided that these words should be broadly interpreted to allow all
disputes between the parties, including disputes as to the validity and enforceability of
the contract, to be resolved by the arbitral tribunal.
In this context, the High Court, in KNM Process Systems Sdn Bhd v. Mission Biofuels Sdn Bhd

29
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [2012] MLJU 839 at paragraph 26, inter alia, held:
… I am of the considered view that the approach in Fiona Trust should be
followed. Quite apart from the broad reading to be given to ‘linking words’ such
as ‘in relation to’ or ‘in connection with’ or ‘arising under’, the principle that it is
to be presumed that rational businessmen would intend to have the same
forum decide disputes between themselves in respect of the same broad
subject matter, unless they have expressed otherwise by clear language, has
much to commend it both in terms of legal principle, logic, commercial sense
and policy … .
This was followed by the High Court in RUSD Investment Bank Inc & 2 Ors v. Qatar Islamic
Bank & 2 Ors [2015] 1 LNS 231 at paragraphs 13-13.1.
Similarly, the Court of Appeal, in Protasco Bhd v. Tey Por Yee & Another Appeal [2018] 5 CLJ
299 at paragraph 59, held that an arbitration agreement should be interpreted widely to
include all disputes between the parties, including disputes involving conspiracy, fraud
and a trust, as the parties, as rational business people, would have wanted all their
disputes decided together:
The position is even clearer in Malaysia by reason of s 10 which grants a
mandatory stay of court proceedings so as to give effect to the arbitration
agreement. Applying Fiona Trusts, it follows that Protasco and PT ASU as rational
business people would have wanted the entirety of their dispute determined by
P 48 an arbitral tribunal and not just that part relating to the dispute arising out of
P 49 the contract. In other words, both the conspiracy to injure/defraud and the
imposition of a constructive trust dispute would be dealt with in any putative
arbitration.
However, the High Court has also recognized that even the broad scope of an arbitration
agreement has its boundaries. In this regard, the High Court has decided that an
arbitration agreement would not be wide enough to cover disputes arising from an order
made by the courts, in MMIP Services Sdn Bhd v. Overseas Assurance Corporation (Malaysia)
Bhd [2016] 5 CLJ 637 at paragraph 53:
… the arbitration agreement applies solely in respect of ‘all disputes,
controversies or differences which may arise out of, in relation to or in
connection with’ the BPTA. The four questions concerned, among others, whether
the defendant had assumed TIMB’s liability under the High Court’s confirmation
order (question on effect of High Court’s confirmation order).
The question on effect of High Court’s confirmation order, in my view, cannot
come within the scope of the arbitration agreement. I refer to s. 9(1) of the AA … .
It is clear that under s. 9(1) of the AA, the arbitration agreement concerns ‘all or
certain disputes which have arisen or which may arise between’ the defendant
and TIMB regarding the BPTA. The arbitration agreement cannot include the
question on effect of High Court’s confirmation order which involves a question
of law in respect of the construction of the relevant provisions of the IA.
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
Democratic Republic [2017] 6 AMR 219 at paragraphs 188 and 194, also emphasized that an
arbitration agreement was limited to disputes arising under the contract it referred to and
that the powers of an arbitral tribunal are limited by the arbitration agreement:
[188] The arbitration agreement provided ‘In the event that a dispute arises out
of this Agreement including any matter relating to the interpretation of this
Agreement … either party may submit the dispute to arbitration conducted in
Malaysia at the Kuala Lumpur Regional Centre for Arbitration in accordance
with the UNCITRAL Rules … ’. Article 1 of the PDA defined ‘agreement’ as ‘this
agreement’. The Appellants submitted ‘the dispute [which arose] out of this
Agreement’ to arbitration. Ordinary contract law principles would read ‘a
dispute [which] arises out of this Agreement’ as ‘a dispute which arises out of
the PDA’. US law should also read ‘arises out of this contract’ as arises ‘out of the
instant contract’ and not some other contract … Following the plain text, only a
dispute that arose out of the PDA could be arbitrable under Article 14.1 of the
PDA.
…
[194] Article 14.1 of the PDA determined the jurisdiction that the parties gave to
the Arbitral Tribunal … .
P 49
P 50
[C] Capable of Settlement by Arbitration
Neither section 9(1) of the Arbitration Act 2005 nor Article 7(1) of Option I of the 2006 Model
Law which it reflects includes the requirement for a ‘subject matter capable of settlement

30
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 by arbitration’ in Article II(1) of the 1958 New York Convention.
The Arbitration Act 2005 deals with this issue separately under section 4 in the context of
the arbitrability of the subject matter of arbitration, and reference should be made to
§4.01-§4.03 supra with regard to this.
The 2006 Model Law does not address this expressly, as it was felt that if the subject
matter was incapable of settlement by arbitration, the arbitration agreement would in any
event be null and void under the applicable national law. Furthermore, it was felt that the
provisions on setting aside and enforcement of an award in the 2006 Model Law
adequately dealt with this issue. (4)

§9.03 THE FORM OF AN ARBITRATION AGREEMENT

Sections 9(2)-(6) of the Arbitration Act 2005, which reflect the last sentence of Article 7(1)
and the whole of Articles 7(2) to (6) of Option I of the 2006 Model Law and Article II(2) of the
1958 New York Convention, provide for the form of the arbitration agreement.
Section 9(2) recognizes that an arbitration agreement may be in the form of either an
arbitration clause or a separate agreement. In practice, an arbitration agreement that
deals with future disputes would usually be in the form of a clause, while an arbitration
agreement that deals with existing disputes will normally be in the form of a separate
agreement. (5)
Sections 9(3)-(6) of the Arbitration Act 2005 essentially provide that an arbitration
agreement must be in writing and then illustrates how this requirement might be achieved.
The requirement that the arbitration agreement be an ‘agreement in writing’ in Article II(2)
of the 1958 New York Convention is preserved in Article 7(2) of Option I of the 2006 Model
Law and section 9(3) of the Arbitration Act 2005.
The reason for this as stated above is to ensure the arbitration agreement and any
subsequent award are recognized by parties to the 1958 New York Convention. If the
requirements for an arbitration agreement were less stringent than the 1958 New York
Convention in a particular state, there is a risk that an award made in that state may not
be enforceable in another state that is party to the 1958 New York Convention.
For example, if State X recognized an oral arbitration agreement and State Y did not have
any national law for the enforcement of an award other than the 1958 New York Convention,
an award made in State X may not be enforceable in State Y.
This is the reason why the definition of an arbitration agreement in the 1985 Model Law
cleaves closely to the 1958 New York Convention.
P 50
P 51
However, while following the 1958 New York Convention closely, the 2006 Model Law has
also reduced the stringent requirement of the Convention to some extent by what may be
termed as illustrations of agreements in writing. The three significant illustrations that
relax the stringent requirement of an agreement in writing appear to be:
(1) a recording in any form;
(2) an exchange of pleadings where the existence of an arbitration agreement is not
denied; and
(3) a reference in an agreement to a document containing an arbitration clause.
We will consider these three illustrations in §9.03[A], §9.03[B] and §9.03[C] infra.

[A] Recorded in Any Form

Section 9(4)(a) of the Arbitration Act 2005 provides for a broadest possible interpretation
of the words an ‘agreement in writing’. An agreement in writing is said to include an
agreement eventually recorded in any form, regardless of whether the arbitration
agreement or the contract in which it is contained was reached orally, by conduct or other
means. In adopting such a broad interpretation, section 9(4)(a) of the Arbitration Act 2005
reflects Article 7(3) of Option I of the 2006 Model Law.
Section 9(4)(a) of the Arbitration Act 2005 and Article 7(3) of Option I of the 2006 Model Law
expand on the definition in Article II(2) of the 1958 New York Convention quite considerably
in this regard. The 1958 New York Convention only provides for an exchange of letters and
telegrams.
The expansion in section 9(4)(a) of the Arbitration Act 2005 and Article 7(3) of Option I of the
2006 Model Law, in particular the use of the words ‘recorded in any form’, is intended to
cover modern and future means of communication. (6)
The impetus for the use of these words came from the 1975 Montreal Protocol No 4 to the
1929 Warsaw Convention. Article 5(III) of the 1975 Montreal Protocol No 4 provides:
Any other means which would preserve a record of the carriage to be performed
may, with the consent of the consignor, be substituted for a delivery of an air
way bill.

31
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The 1975 Montreal Protocol No 4 had electronic communications in mind, as the aviation
industry was one of the first to use this means of communication.
The Secretariat’s Report at paragraph 21 confirms that the exchange need not be signed.
P 51 The High Court, in Usahasama SPNB-LTAT Sdn Bhd v. Borneo Synergy (M) Sdn Bhd [2009] 7
P 52 CLJ 779 at paragraphs 11-19, 25, 41, recognized that an arbitration agreement could be
contained in an exchange of letters under section 9(4)(b) of the Arbitration Act 2005, prior
to the amendments by the Arbitration (Amendment) (No 2) Act 2018.
Somewhat unusually, in Usahasama SPNB-LTAT supra, the exchange of letters appears to
have novated the underlying contract, including the arbitration agreement, to a third
party. The High Court also appeared to decide that an assignment of money due under a
contract to a third party would also include the assignment of the benefits of the
arbitration clause in that contract. Further, the High Court appears to have decided that
the conduct of the parties could be considered to determine whether a contract, including
the arbitration clause it contained, had been novated.

[B] Exchange of Pleadings

Section 9(4)(b) of the Arbitration Act 2005 provides that an arbitration agreement is in
writing, where it is not denied in an exchange of pleadings.
This reflects Article 7(5) of Option I of the 2006 Model Law. This also represents a significant
expansion of the definition of an agreement in writing in Article II(2) of the 1958 New York
Convention. There is no concept similar to this in the 1958 New York Convention.
Indeed, it is possible that section 9(4)(b) goes beyond an ‘agreement in writing’ envisaged
by the 1958 New York Convention. This is because even an oral arbitration agreement may
not be denied in an exchange of pleading and will therefore be recognized under the
Arbitration Act 2005. But, such an oral agreement is unlikely to be recognized under the
1958 New York Convention. There may accordingly be difficulty in enforcing an award
pursuant to such an oral agreement in States that do not have a national law that goes
beyond the 1958 New York Convention.

[C] Reference in an Agreement

Section 9(5) of the Arbitration Act 2005 provides for a situation commonly encountered in
practice, where an agreement refers to another document which includes an arbitration
clause. The section provides that such a reference will amount to an arbitration agreement
provided that:
(1) the agreement is in writing; and
(2) the reference is such as to make that clause a part of the agreement.
Section 9(5) of the Arbitration Act 2005 reflects Article 7(6) of Option I of the 2006 Model
Law. There is no equivalent provision in the 1958 New York Convention. The 2006 Model Law
included this provision to clarify the 1958 New York Convention, as divergent approaches
were taken by national courts on this matter. (7)
P 52
P 53
It is important to bear in mind that, based on the words ‘reference … to a document
containing an arbitration clause’ in section 9(5) of the Arbitration Act 2005, which reflects
Article 7(6) of Option I of the 2006 Model Law, the reference in the agreement needs only to
be to the document, and no explicit reference to the arbitration clause in the document is
required. (8)
The requirements for an arbitration agreement under section 9(5) of the Arbitration Act
2005 were lucidly explained by the High Court, in Y & Y Property Development Sdn Bhd v.
City-Lite Letrik Sdn Bhd [2014] 1 LNS 1480 at paragraphs 21-23:
[21] In order for an incorporation by reference to be effective under Section 9(5),
the following conditions must be met:
(a) There must be a reference in the subject agreement to another document
that contains an arbitration clause;
(b) That subject agreement must be in writing; and
(c) The reference in the subject agreement must have the effect of making the
arbitration clause part of the subject agreement.
[22] It is not sufficient for an agreement to simply refer to another document
that contains an arbitration clause. That reference must be of a nature that
makes the arbitration clause part of the subject agreement – in other words,
incorporating it by reference … .
[23] Note that there is no need for there to be a specific or express reference to
the arbitration clause. It suffices if, for example, the subject agreement
provides that the terms of another agreement will apply to the subject
agreement, thereby incorporating by reference all the terms of that other
agreement, including its arbitration clause.

32
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The reference in an agreement to a document containing an arbitration clause occurs
frequently in practice. We will consider below judgments that have determined whether
such a reference is sufficient to meet the requirements of section 9(5) of the Arbitration Act
2005 set out above.
The High Court, in Total Safe Sdn Bhd v. Tenaga Nasional Berhad & Anor [2009] 1 LNS 420 at
paragraph 8, dealt with a common situation in the construction industry, where a letter of
acceptance refers to a tender, which in turn incorporates the invitation to tender. The High
Court decided that the letter of acceptance did not incorporate the arbitration clause in
the invitation to tender, as the letter of acceptance only referred to the tender and not the
invitation to tender. Furthermore, the tender was not produced in evidence and the
invitation to tender, which was produced, was incomplete and did not name the party that
had issued the invitation to tender.
The High Court, in Mersing Construction & Engineering Sdn Bhd v. Kejuruteraan Bintai
Kindenko Sdn Bhd & 3 Ors [2010] 1 LNS 793 at pages 7-9, dealt with a subcontract that
incorporated the terms of the main contract. The main contract included the International
Federation of Consulting Engineers (FIDIC, its acronym in French) General Conditions of
P 53 Contract Edition 1999. The High Court decided that the subcontract did not incorporate the
P 54 arbitration clause in the FIDIC General Conditions, as only the appendix to the main
contract was produced in evidence. This appendix only referred to a dispute adjudication
board and not to arbitration.
The Court of Appeal, in AGIBS Engineering & Construction Sdn Bhd v. Paragon Advance
Solutions Sdn Bhd [2011] 1 LNS 1019, decided that a letter of award for subcontract works in
the construction industry, which provided that the subcontract shall be governed by the
terms and conditions of the main contract, incorporated the arbitration clause in the main
contract into the subcontract. The main contract appears to have been on the terms of the
Public Works Department (PWD) form of contract. The Court of Appeal also decided that
there was no requirement for the agreement to be signed. The Court of Appeal held, in
AGIBS Engineering supra at paragraph 9, inter alia:
In Bina Puri Sdn Bhd v. EP Engineering Sdn Bhd & Anor [2008] 3 CLJ 741; [2008] 3
MLJ 564, it was held by the Court of Appeal that it is trite law that an agreement
to arbitrate must be in writing; but it is not a law that an agreement to arbitrate
by itself must be signed. Suffice that there is such an agreement. Depending on
the facts and circumstances of each case, an agreement to arbitrate in one
contract may be incorporated in another contract. There may be express
incorporation or incorporation by conduct. In the present case, the letter of
award dated 13 November 2006 at p. 81 of the appeal records incorporates the
terms and conditions of the main contract which provides for arbitration clause
under cl. 54. The respondent is estopped from denying that it has no knowledge
of the arbitration clause which is specifically stated in the main contract the
terms and conditions of which have been expressly agreed to be bound with.
The Court of Appeal, in Duta Wajar Sdn Bhd v. Pasukhas Construction Sdn Bhd & Anor [2012]
4 CLJ 844 at paragraph 31, decided that an invitation to quote issued to a subcontractor in
the construction industry, which referred to the main contract, did not incorporate the
arbitration clause in the main contract, as there was no evidence of the terms of the main
contract.
The Federal Court, in Ajwa for Food Industries Co (MIGOP) Egypt v. Pacific Inter-Link Sdn Bhd
[2013] 7 CLJ 18, decided that unsigned contracts for the sale and purchase of palm oil
products, which referred to the seller’s standard terms and conditions that included an
arbitration clause, incorporated an arbitration agreement by reference. The Federal Court
held that the contracts for sale need not be signed as it could be inferred from the conduct
of the parties that they had agreed to the terms of such contracts. This satisfied the
requirement that there was an agreement in writing. The Federal Court also held that there
was no need for the contracts for sale to specifically refer to the arbitration clause in the
standard terms and conditions so long as the standard terms were incorporated. Further,
the Federal Court held that there was no need for the standard terms referred to to be
signed. The Federal Court, in Ajwa for Food supra at paragraphs 22, 25-27, inter alia, held:
[22] On the question of whether the Sales Contracts are binding without the
signature, we agree with the submission of the respondent that the Sales
Contracts are not subject to any condition that they be signed before coming
into effect. It is common knowledge that international agreements between
P 54 parties doing business from different parts of the world ranging especially in
P 55 international sales of goods and charter parties are concluded and
performed without the need for signatures, so long as parties have agreed on
the terms. Likewise, the Sales Contracts setting out the agreed terms, despite
the lack of signature as in the present case are valid and enforceable contracts
….
…
[25] We are of the view that an arbitration agreement need not be signed … [26]
Section 9(5) of the Act therefore clarifies that the applicable contract law

33
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 remains available to determine the level of consent necessary for a party to
become bound by an arbitration made ‘by reference’. Section 9(5) of the Act in
our view addresses the situation where the parties, instead of including an
arbitration clause in their agreement, include a reference to a document
containing an arbitration agreement or clause. It also confirms that an
arbitration agreement may be formed in that manner provided, firstly, that the
agreement in which the reference is found meets the writing requirement and
secondly, that the reference is such as to make that clause part of the
agreement. The document referred to need not to be signed by the parties to
the contract. See the case of Astel-Peiniger Joint Venture v. Amos Engineering &
Heavy Industries Co Ltd [1994] 3 HKC 3281. We are of the view that the mere fact
the arbitration clause is not referred to in the contract and that there is a mere
reference to standard conditions which was neither accepted nor signed, is not
sufficient to exclude the existence of the valid arbitration clause. There is no
requirement that the arbitration agreement contained in the document must be
explicitly referred to in the reference. The reference need only be to the
document and no explicit reference to the arbitration clause contained therein
is required.
[27] On the contention of the appellant that the Courts below had been swayed
in coming to their conclusion and decision in favour of the respondent that
there was an agreement to refer their disputes to arbitration based on past
conduct and transactions of the parties, we are of the view the Courts below
were not in error. Such previous conducts and transactions of the parties were
merely considered for the purpose of imputing knowledge of the appellant of
the provisions of the STC and the arbitration agreement … .
The High Court, in Y & Y Property supra at paragraphs 28 and 29, decided that a subcontract
for the performance of construction works, which refers to the main contract in its recitals,
does not thereby incorporate the terms of the main contract including the arbitration
clause therein.
The High Court, in CLLS Power System Sdn Bhd v. Sara-Timur Sdn Bhd [2015] 1 LNS 149 at
paragraphs 23 and 24, decided that a letter of award issued by a main contractor to a
subcontractor for the performance of construction works, which expressly referred to the
Malaysian Institute of Architects (PAM, its acronym in Malay) form of contract did not
incorporate the arbitration clause in the PAM form because the letter of award provided
that the letter and the tender would form a binding contract until the formal contract
documents were executed.
The Court of Appeal, in Best Re (L) Limited v. Ace Jerneh Insurance Bhd [2015] MLJU 0256,
decided that the reference in an agreement to a document containing an arbitration
clause need only be a reference to the document and need not be a reference to the
P 55 arbitration clause in the document. The Court of Appeal, in Best Re supra at paragraph 43,
P 56 inter alia, held:
On our part, whilst we are appreciative of the fact that the English s 6(2) and our
s 9(5) of the Act are similarly worded, we must also consider the intention of the
legislature when it decided to adopt the UNCITRAL Model Law in drafting s 9(5).
As we have seen above, when the Model Law was proposed the working group on
the Model Law made it very clear (and this is supported by the numerous
comments by textbook writers and commentators on the Model Law) that it was
not the intention of Article 7(2) of the Model Law to make it a necessary
requirement to make specific reference to an arbitration clause or agreement in
one document before it can be incorporated in another agreement. The working
group on the Model Law made it very clear that a general reference would
suffice to give effect to the incorporation. In our opinion the principle that the
Court should attempt to give business efficacy in interpreting and construing a
commercial document or contract, must be applied liberally to save the
commercial transactions entered into between the parties and not to disrupt
them. This does not, however, mean that the Court must disregard all
established principles of construction of documents and contracts. What it
means is that within the perimeter of these principles, the Court ought to be
courageous enough to apply the principle in most beneficial way that would
contribute to the efficacy of doing business and to ensure that the law stays
abreast with the real commercial world. This is particularly important because
the business community and the commercial people are normally innovative
and creative. The ways of doing businesses keep changing and the law has to
keep up with it lest it becomes obsolete and could hamper and stifle trade and
commerce.
The High Court, in NR Rubber Industries Sdn Bhd v. Sritong Rubber Latex Company Limited
[2017] 1 LNS 916 at paragraphs 43, 46-48, decided that a contract for the sale and purchase
of latex, which referred to the standard form TRA/MRE Preserved NR Latex Contract (TRA is
an acronym for the Thai Rubber Association, and MRE is an acronym for the Malaysian
Rubber Exchange), did not incorporate the arbitration clause in the standard form, as the
arbitration clause was not specifically incorporated. Furthermore, the arbitration clause in

34
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the standard form required the parties to the contract to elect between the arbitration
rules of the Thai Rubber Arbitration Committee or the MRE and for this election to be
stated in the contract for sale, which was not done.
The Federal Court, in Arch Reinsurance Ltd v. Akay Holdings Sdn Bhd [2018] MLJU 2117 at
paragraphs 48 and 49, considered a subscription agreement, which included an arbitration
clause, and referred to a charge to be issued as security. The Federal Court held that the
subscription agreement and the charge were separate and distinct contracts. As such, the
arbitration clause in the subscription agreement was not incorporated in the charge. The
Federal Court relied on the entire agreement clause in the subscription agreement to hold
that the arbitration clause in the subscription agreement was not intended to apply to the
charge. The Federal Court also emphasized that it was not uncommon in commercial
transactions to split multifaceted transactions into different agreements containing
different dispute resolution provisions.
P 56
P 57

10. Arbitration Agreement and Substantive Claim Before Court

(1) A court before which proceedings are brought in respect of a matter which is the subject
of an arbitration agreement shall, where a party makes an application before taking
any other steps in the proceedings, stay those proceedings and refer the parties to
arbitration unless it finds that the agreement is null and void, inoperative or incapable
of being performed.
(2) The court, in granting a stay of proceedings pursuant to subsection (1), may impose any
conditions as it deems fit.
(2A) Where admiralty proceedings are stayed pursuant to subsection (1), the court granting
the stay may, if in those proceedings property has been arrested or bail or other security
has been given to prevent or obtain release from arrest—
(a) order that the property arrested be retained as security for the satisfaction of any
award given in the arbitration in respect of that dispute; or
(b) order that the stay of those proceedings be conditional on the provision of
equivalent security for the satisfaction of any such award.
(2B) Subject to any rules of court and to any necessary modifications, the same law and
practice shall apply in relation to property retained in pursuance of an order under
subsection (2A) as would apply if it were held for the purpose of proceedings in the court
making the order.
(2C) For the purpose of this section, admiralty proceedings refer to admiralty proceedings
under Order 70 of the Rules of the High Court 1980 [P.U. (A) 50/1980] and proceedings
commenced pursuant to paragraph 24(b) of the Courts of Judicature Act 1964.
(3) Where the proceedings referred to in subsection (1) have been brought, arbitral
proceedings may be commenced or continued, and an award may be made, while the
issue is pending before the court.
(4) This section shall also apply in respect of an international arbitration, where the seat of
arbitration is not in Malaysia.

§10.01 INTRODUCTION
Section 10 of the Arbitration Act 2005 provides for an important negative effect of an
arbitration agreement, which is, that a court will not hear and determine a matter that is
the subject of an arbitration agreement. Instead, the courts will stay the proceeding and
refer the parties to arbitration. (9)
Section 10 of the Arbitration Act 2005 is similar to Article 8 of the 1985 Model Law, which
provides:
P 57
P 58 Article 8. Arbitration agreement and substantive claim before court
(1) A court before which an action is brought in a matter which is the subject
of an arbitration agreement shall, if a party so requests not later than
when submitting his first statement on the substance of the dispute, refer
the parties to arbitration unless it finds that the agreement is null and
void, inoperative or incapable of being performed.
(2) Where an action referred to in paragraph (1) of this article has been
brought, arbitral proceedings may nevertheless be commenced or
continued, and an award may be made, while the issue is pending before
the court.
In particular section 10(1) reflects Article 8(1) save that:
(1) the word ‘action’ has been substituted with ‘proceeding’, the latter being broader;
(2) the words ‘in a matter’ have been substituted with ‘in respect of a matter’, the latter
again appearing broader;
(3) the word ‘request’ has been substituted with the word ‘application’, in conformity
with Malaysian civil procedure rules in the Rules of Court 2012;

35
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (4) the words ‘not later than when submitting his first statement on the substance of the
dispute’ have been substituted with ‘before taking any other steps in the
proceedings’. The words used in the 1985 Model Law provide greater certainty. There
remains considerable debate on the meaning of the words ‘other steps’ used in the
Arbitration Act 2005;
(5) the words ‘stay those proceedings and’ have been inserted in the Arbitration Act 2005
before the words ‘refer the parties to arbitration’. Again, this is due to Malaysian civil
procedure rules, where the courts would stay the proceedings in court and refer the
parties to arbitration; and
(6) previously, section 10(1)(b) of the Arbitration Act 2005 provided:
‘that there is in fact no dispute between the parties with regard to the
matters to be referred.’
This subsection is not found in Article 8(1) of the 1985 Model Law and was
deleted by the Arbitration (Amendment) Act 2011.
Section 10(2) of the Arbitration Act 2005 is not found in the 1985 Model Law. This section
allows the courts to impose conditions when granting a stay.
Sections 10(2A)-(2C) were introduced by the Arbitration (Amendment) Act 2011 to address
concerns of the admiralty bar. These new provisions allow the courts to order the detention
of property or provision of security pending the determination of disputes in admiralty
proceedings. There are no equivalent provisions in the 1985 Model Law.
Section 10(3) of the Arbitration Act 2005 closely resembles Article 8(2) of the 1985 Model
Law. This provision confirms that irrespective of proceedings commenced in court, arbitral
proceedings may be commenced, continued and concluded. This is to reduce the risk of
dilatory tactics of a party breaching his agreement to arbitrate. (10)
P 58
P 59
Section 10(4) was introduced by the Arbitration (Amendment) Act 2011. This provision
clarifies that a court may stay proceedings in favour of a foreign arbitration with a seat
outside Malaysia. This new provision serves a similar purpose as Article 1(2) of 1985 Model
Law, which makes an exception for Article 8. This new provision clarified the law, as it had
previously been argued that section 10 did not apply to foreign arbitrations with a seat
outside Malaysia. (11)
While sections 10(1) and (3) of the Arbitration Act 2005 resemble Article 8(1) and (2) of the
1985 Model Law, the provisions of the 1985 Model Law, in turn, reflect Article II(3) of the
1958 New York Convention.
Article II(3) of the 1958 New York Convention provides:
The court of a Contracting State, when seized of an action in a matter in respect
of which the parties have made an agreement within the meaning of this article,
shall, at the request of one of the parties, refer the parties to arbitration, unless
it finds that the said agreement is null and void, inoperative or incapable of
being performed.
Article 8 of the 1985 Model Law, which was closely modelled on Article II(3) of the 1958 New
York Convention, made two significant additions to the Convention.
First, the 1985 Model Law included a time element to the request by a party to have the
matter referred to arbitration. The time element included in Article 8(1) of the 1985 Model
Law is that such a request must be made by a party no later than when submitting his first
statement on the substance of the dispute. There is a similar provision in section 10(1) of
the Arbitration Act 2005, which requires an application to be made before a party takes
any other step in the proceedings. The failure by a party to make such a request or
application would result in the party being unable to invoke the arbitration agreement at
a later phase of the proceedings. (12)
Second, the 1985 Model Law introduced Article 8(2), which is not found in the 1958 New York
Convention. Section 10(3) of the Arbitration Act 2005 reflects Article 8(2) of the 1985 Model
Law. As stated above, these provisions allow the arbitral proceedings to continue, despite
pending proceedings in court.

§10.02 GENERAL SCHEME

The general scheme of section 10(1) of the Arbitration Act 2005 is that:
(1) the applicant must show:
(a) the existence of an arbitration agreement; and
(b) that the proceedings in court are in respect of a matter that is subject to such
an arbitration agreement.
(2) the court must then stay such proceedings, unless;
(3) the respondent shows that:

36
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (a) the applicant has taken a step in such proceedings;
P 59
P 60
(b) the arbitration agreement is null and void, inoperative or incapable of being
performed.
The general scheme of section 10(1) was explained by the Court of Appeal, in Lembaga
Pelabuhan Kelang v. Kuala Dimensi Sdn Bhd & Anor Appeal [2010] 9 CLJ 532 at paragraph 20:
In considering the respective burden of proof under s. 6 (Singapore) in Tjong
Very Sumito supra, VK Rajah JA opined as follows:
In order to obtain a stay of proceedings in favour of arbitration under
s. 6, the party applying for a stay (the applicant) must first show that
he is party to an arbitration agreement, and that the proceedings
instituted involve a matter which is the subject of the [arbitration]
agreement. In other words, the applicant has to show that the
proceedings instituted fall within the terms of the arbitration
agreement. If the applicant can show that there is an applicable
arbitration agreement, then the court must grant a stay of
proceedings unless the party resisting the stay can show that one of
the statutory grounds for refusing a stay exists, ie, that the
arbitration agreement is ‘null and void, inoperative or incapable of
being performed’.

§10.03 SPECIFIC PROVISIONS

Due to the significance of section 10, we will now consider the specific provisions of this
section.

[A] ‘A Court …’
It is important to note that, unlike the other provisions of the Arbitration Act 2005 that
refer specifically to the High Court, section 10(1) refers more generally to ‘court’.
The word ‘court’ is broad enough to include any court, which would include the Magistrates
Court and the Sessions Court, apart from the High Court, in which the proceedings may
have been commenced. A party may accordingly apply for a stay in any court in which the
proceedings were commenced.
This was recognized by the High Court, in Uba Urus Asia Sdn Bhd v. Quirk & Associates Sdn
Bhd & Anor [2016] 4 CLJ 468 at paragraph 37, where it was held:
Unlike ss. 11, 15, 18, 29, 37, 38, 39, 41, 42, 43, 44, 45, 46 and 50 of the Arbitration
Act 2005, where the word ‘court’ is specifically identified as the ‘High Court’, the
words used in s. 10 is ‘a court’. Arguably, this will include the Magistrates and
Sessions courts as the term ‘court’ is not defined in s. 2 of the Arbitration Act
2005; but the term ‘High Court’ is. With the amendments to the financial limits
of the subordinate courts, applications for orders under s. 10 can properly come
within the jurisdiction of the subordinate courts.
P 60
P 61
[B] ‘… Before Which Proceedings Are Brought …’
Again, the word ‘proceedings’ used in section 10(1) is general. Proceedings would include
any claim, action or suit, as well as originating summons. Essentially, every means of
commencing proceedings in the courts is covered.
This was recognized by the High Court, in ZAQ Construction Sdn Bhd & Anor v. Putrajaya
Holdings Sdn Bhd [2014] 4 CLJ 895 at paragraph 37, where it was held:
It is also observed that the term ‘proceedings’ is used in sub-s. 10(1) as opposed
to ‘claim, action or suit’. This term may be said to include any claim, action or
suit as well as any originating summons filed whether under the Rules of Court
2012 or under s. 50 of Act 646.
There is a continuing debate as to whether the word ‘proceedings’ may be broad enough to
include a winding-up petition. The High Court, in NFC Labuan Shipleasing I Ltd v. Semua
Chemical Shipping Sdn Bhd [2017] 1 LNS 943 at paragraphs 34 and 35, held that a winding-up
petition was sui generis and did not amount to a substantive claim before the court within
the meaning of section 10. As such, an application to stay such a petition pending
arbitration would not be allowed:
[34] It bears repetition that the petition is sui generis as winding-up
proceedings feature a distinct characteristic of a wider legal process. Even
though it may be initiated by a single petitioning creditor, upon the granting of
the order for winding-up, the process which enables what may be regarded as
the collective enforcement of proven debts of the company will be activated,

37
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 for the benefit of not just the petitioner but instead the general body of
unsecured creditors, all on pari passu basis. It must be recognized that a
winding-up petition is not a claim for payment. It is, instead, what may be
regarded as a class action in the public interest which brings into operation the
statutory regime for realising and distributing the assets of a company for the
benefit of its creditors. This is manifestly not the objective of having the alleged
dispute referred to arbitration. The reliefs are certainly not the same and the
end results, of a successful civil dispute subject to arbitration and a winding-up
petition, if granted, could not be more different and are miles apart.
[35] A stay application of a winding-up petition pending arbitration could thus
be viewed to be of doubtful relevance and validity. A winding-up petition is not
in the nature of a substantive claim before the Court that is contemplated by
Section 10 of the AA. Section 10 talks about a matter in a substantive claim, as
stated in its heading. But a winding-up process is essentially a proceeding to
wind up for the inability to pay debt, as was alleged in this instant case. The
respondent, in response, need only to show the debt to be disputed and to
rebut presumption of insolvency. The affidavit in opposition is designed to help
a debtor to achieve this.
However, the High Court, in Goh Nguang Chian v. Dynapack Eoss Packaging Sdn Bhd [2018]
MLJU 885 at paragraphs 46 and 48, held that it was not unusual for a winding-up petition to
be stayed under section 10 of the Arbitration Act 2005. The High Court emphasized that a
P 61 dispute remains arbitrable, although winding-up is not available as a remedy before an
P 62 arbitrator:
[46] The staying of petitions presented under Section 466 of the CA 2016 (then
Section 218 of the Companies Act 1965) on the basis of an arbitration agreement
is not unusual:
…
[48] The disputes underlying a petition to wind up a company are arbitrable.
The fact that a remedy may not be available to an arbitrator is not a ground to
render a dispute non-arbitrable. As such, it is clear that the Substantive Dispute
is arbitrable in Malaysia.
The High Court, in Goh supra did not refer to the earlier judgment of the High Court, in NFC
Labuan supra. Subsequently, the High Court, in Awangsa Bina Sdn Bhd v. Mayland Avenue
Sdn Bhd (HC, 2 May 2019) at paragraphs 12, 25 and 28, considered the conflicting judgments
in NFC Labuan and Goh supra, and followed NFC Labuan supra. The High Court held that
section 10 of the Arbitration Act 2005 did not apply to a winding-up petition. However, the
High Court emphasized that the courts retained a discretion to dismiss a winding-up
petition, where there was an arbitration agreement between the parties provided that
there was a prima facie dispute between the parties. The High Court held that a prima
facie dispute arises when a claim is denied:
[12] I am inclined to agree with the decision in NFC Labuan that Section 10 of the
Arbitration Act does not apply to winding up petitions … .
…
[25] Applying the decisions in Salford Estates, Bdg v Bdh and the Lasmos case, I
should ascertain whether there is a prima facie dispute of the debt claimed by
the Petitioner … .
…
[28] However, applying the lower threshold of merely showing a prima facie
dispute, since the debt here is the subject matter of an arbitration clause, I am
of the view that the Respondent has discharged the burden of showing a prima
facie dispute, bearing in mind that a denial of the indebtedness constitutes a
dispute. The merits or otherwise of the dispute are matters to be decided by
the arbitrator and not by this Court and the Respondent had given notice of
arbitration to the Petitioner. Accordingly, I would not stay the winding up
petition pending arbitration under section 10 of the Arbitration Act 2005 but, in
the exercise of my discretion under section 465 of the Companies Act 2016, I
would dismiss the winding up petition on the ground that the Respondent has
shown the existence of a prima facie dispute which ought to be referred to
arbitration.

[C] ‘… In Respect of a Matter Which is the Subject of an Arbitration Agreement …’

The key term here is ‘arbitration agreement’. The meaning of these words is set out in
section 9 of the Arbitration Act 2005, which has been considered in §9.01, §9.02 and §9.03
supra. In the absence of an arbitration agreement, the courts will not grant a stay under
section 10.
P 62 For example, the High Court, in Mersing Construction & Engineering Sdn Bhd v. Kejuruteraan
P 63 Bintai Kindenko [2010] 1 LNS 793 at page 10, after finding that an arbitration agreement

38
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 63
had not been incorporated in a building subcontract between the parties went on to hold
that:
Section 10(1) of the abovementioned Act clearly provides that the matter must
be the subject of an arbitration agreement before the Court can consider an
application for a stay of proceedings. Under the said Act arbitration agreement
means ‘… an agreement by the parties to submit to arbitration all or certain
disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.’ The arbitration
agreement may be in the form of an arbitration clause in an agreement or in the
form of a separate agreement. In the instant case the Appendix to the Main
Contract only makes reference to a Dispute Adjudication Board for settlement of
dispute. There is no specific or express provision that the dispute will be
referred to arbitration.
[1] Arbitration and Exclusive Jurisdiction Clauses
An issue that has frequently been considered by the courts is the apparent contradiction
between an exclusive jurisdiction clause and an arbitration clause.
In this context, the Court of Appeal, in Lembaga Pelabuhan Kelang v. Kuala Dimensi Sdn Bhd
& Another Appeal [2010] 9 CLJ 532, declined to grant a stay, after finding that an arbitration
clause in a principal development agreement had been superseded by a clause giving
exclusive jurisdiction to the courts in a subsequent supplemental agreement. Furthermore,
the court decided that the use of the word ‘may’ in the arbitration clause meant that the
parties might opt for civil proceedings. The Court of Appeal, in Lembaga Pelabuhan Kelang
supra at paragraph 30, inter alia, held:
… unlike the peremptory word ‘shall’, the permissive word ‘may’ used in the
arbitration clause ie, cl. 11.1 of DA1 is capable of readily abandoning the
discretion to refer to arbitration, and opting for litigation instead, as expressed
and contractually agreed by the parties in the supplemental agreements DA2
and DA3 via ‘the submission to court jurisdiction clauses’ that ‘the parties
hereto hereby submit to the jurisdiction of the courts of Malaysia in all matters
connected with the obligation and liabilities of the parties under this
supplemental agreement.’ This construction is further strengthened when the
parties have contractually agreed that the principal agreement DA1 including
the word ‘may’ in the arbitration clause shall be read subject to ‘the submission
to court jurisdiction clauses’ in the supplemental agreements which shall
prevail. The irresistible conclusion is that while it is true the parties had
originally intended to have the discretion to refer their disputes to arbitration,
that discretion has been subsequently displaced, compromised or abandoned
when they have expressly submitted to the jurisdiction of the court ie, to
litigate all matters connected with the obligation and liabilities of the parties
under DA2 and DA3 to which DA1 is subject. The High Court actions are therefore
within the jurisdiction of our High Court.
Similarly, the High Court, in Sime Engineering Sdn Bhd v. Ahmad Zaki Resources Berhad
P 63 [2011] MLJU 370 at page 11, considered a joint venture agreement that included an
P 64 arbitration clause, which provided that disputes may be referred to arbitration. The
joint venture agreement also provided that the parties would submit to the non-exclusive
jurisdiction of the Malaysian courts. The High Court, followed Lembaga Pelabuhan Kelang
supra, and declined to grant a stay on the grounds that the arbitration clause and the court
jurisdiction clause were contradictory and, in any event, the arbitration clause was
permissive.
However, the High Court, in Majlis Perbandanan Alor Gajah v. Sunrise Teamtrade Sdn Bhd
[2013] 7 CLJ 872 at paragraphs 14 and 15, also considered a joint venture agreement that
had an arbitration clause that provided that disputes may be referred to arbitration after
termination. In addition, the joint venture agreement provided for the exclusive
jurisdiction of the courts and for disputes that could not be amicably resolved to be
referred to the courts during the progress of the agreement. The High Court held that these
provisions were complimentary. The exclusive jurisdiction given to the courts was for the
purpose of supervising the arbitration, with the courts having a role to play in relation to
arbitration under the Arbitration Act 2005. The provisions in the joint venture agreement
that allowed for reference of disputes to the courts and to arbitration were not
contradictory, as the former was for disputes that arose during the progress of the
agreement while the latter was for disputes arising from termination. The High Court also
held that the use of the word ‘may’ in the arbitration clause meant that once one of the
parties had opted for arbitration, arbitration was mandatory. In this regard, the High Court
distinguished Lembaga Pelabuhan Kelang supra on the grounds that in that case the
supplemental agreement clearly superseded the principal agreement. The High Court
accordingly granted a stay.
Similarly, the High Court, in Hamidah Fazilah Sdn Bhd v. Universiti Tun Hussein Onn Malaysia
(UTHM) [2017] 7 MLJ 274 at paragraph 54, held that there was no contradiction between an
exclusive jurisdiction clause and an arbitration clause in the PWD standard form of
building contract, as parties to an arbitration required the courts for assistance:

39
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 As we are all aware, when it comes to certain reliefs in aid of arbitration and
more so when it comes to setting aside and enforcement of an arbitral award,
the parties seeking such reliefs would still have to come to the relevant court
for assistance. To avoid bickering over what law to apply and which court to
apply for such reliefs, parties have addressed this issue at the outset in
governing law clause. As both the parties are incorporated in Malaysia and
carrying out their business here and as the project is here, it makes every sense
for the laws of Malaysia to apply. Parties have agreed to submit to the exclusive
jurisdiction of the courts of Malaysia where there is a need to come to the
Malaysian courts to apply for interim measures such as an injunction for
instance under s 11 of the Arbitration Act 2005 or for setting aside the award
under s 37 or to refer a question of law under s 42 or under s 38 for enforcement
of the arbitral award.
Subsequently, the High Court, in Thien Seng Chan Sdn Bhd v. Teguh Wiramas Sdn Bhd & Anor
[2017] MLJU 1117 at paragraph 59 and Maya Maju (M) Sdn Bhd v. Putrajaya Homes Sdn Bhd
[2018] MLJU at paragraphs 54 and 56, followed Hamidah Fazilah supra. It is submitted that
the better approach is that an exclusive jurisdiction clause and an arbitration clause are
P 64 complimentary. The exclusive jurisdiction clause is meant to fix the court that has
P 65 supervisory jurisdiction over the arbitration for purposes of interim measures, setting
aside, etc. and is not meant to negate or contradict the arbitration clause.
[2] Linking Words in an Arbitration Clause
Apart from this issue, the courts have also considered how broad an arbitration agreement
is. In this context, the High Court, in KNM Process Systems Sdn Bhd v. Mission Biofuels Sdn
Bhd [2013] 1 CLJ 993 at paragraph 26, followed the judgment of the House of Lords, in Fiona
Trust & Holding Corporation and Others v. Privalov and Others [2007] 4 All ER 951, and it held
that ‘linking words’ such as ‘in relation to’, ‘in connection with’ or ‘arising under’ commonly
found in an arbitration clause should be given a broad reading, allowing all disputes to be
resolved by a single tribunal in accordance with the presumption that a rational
businessman would desire this. In the light of this broad reading of the arbitration clause,
the stay was allowed by the High Court.
However, the boundaries of an arbitration agreement are recognized as the High Court, in
MMIP Services Sdn Bhd v. Overseas Assurance Corporation (Malaysian) Bhd [2016] 5 CLJ 637 at
paragraph 54, held that section 10 of the Arbitration Act 2005 would apply to questions on
the effect of a court order, which were not covered by the arbitration agreement.
Similarly, the Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao
People’s Democratic Republic [2017] 6 AMR 219 at paragraph 188, interpreted the words
‘arise out of this agreement’ in an arbitration agreement as meaning that only disputes
arising from the subject contract may be referred to arbitration.
[3] Jurisdictional Issues
The courts have leaned in favour of arbitration by holding that any dispute as to
jurisdiction should be determined by the arbitral tribunal under section 18 rather than by
the courts under section 10.
The Federal Court, in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 5 MLJ 417 at
paragraph 38, recognized the competency of an arbitral tribunal to rule on its own
jurisdiction:
The court must acknowledge the competency of an arbitral tribunal to decide
on its own jurisdiction without interference. The intention of Parliament is clear.
Reading ss 8, 10 and 18 together would indicate that Parliament has given the
arbitral tribunal much wider jurisdiction and powers; and such powers extend
to cases where even its own jurisdiction or competence or the scope of its
authority, or the existence or validity of the arbitration agreement or clause, is
challenged. To comply with the requirements of s 10(1) the court should restrict
its enquiry only to the issue of whether there is in existence a binding
arbitration agreement or clause between the parties and whether the
arbitration agreement or clause is null and void, inoperative or incapable of
being performed. If the court is satisfied that the arbitration agreement or
clause does not fall into any of these exceptions, it must order a stay of
proceedings and refer the matter to arbitration.
P 65
P 66
[D] ‘… Shall …’
It is now settled that the use of the imperative ‘shall’ in section 10(1) of the Arbitration Act
2005 means that it is mandatory for the courts to grant a stay once the requirements of the
section are met. The courts do not have the discretion as to whether to grant a stay and,
instead, must do so once these requirements are met.
There are several authorities for this proposition; the appellate authorities are considered
below.

40
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The Federal Court, in Press Metal supra at paragraph 32, confirmed that:
The clear effect of the present s 10(1) of the 2005 Act is to render a stay
mandatory if the court finds that all the relevant requirements have been
fulfilled; while under s 6 of the repealed 1952 Act, the court had a discretion
whether to order a stay or otherwise.
Similarly, the Federal Court, in Far East Holdings Bhd & Anor v. Majlis Ugama Islam dan
Adat Resam Melayu Pahang and other appeals [2018] 1 MLJ 1 at paragraph 108 and Arch
Reinsurance Ltd v. Akay Holdings Sdn Bhd [2018] MLJU 2117 at paragraph 54, reaffirmed the
position taken in Press Metal supra.
The Court of Appeal, in Renault SA v. Inokom Corporation Sdn Bhd & Anor and Other
Applications [2010] 5 CLJ 32 at paragraph 22, inter alia, held:
The provision on stay of court proceedings pending arbitration is found in s. 10
of the 2005 Act. The requirement to stay is mandatory … .
Similarly, the Court of Appeal, in Albilt Resources Sdn Bhd v. Casaria Construction Sdn Bhd
[2010] 7 CLJ 785 at paragraph 43, held:
… Suffice for me to say that s. 10 of the same Act imposes a mandatory
obligation to stay the proceedings and refer the parties to arbitration. The word
‘shall’ that appears in s. 10 of the same Act must necessarily mean ‘directory’ or
‘mandatory’ … .
The Court of Appeal, in Lembaga Pelabuhan Kelang v. Kuala Dimensi Sdn Bhd & Another
Appeal [2010] 9 CLJ 532 at paragraphs 18 and 19, confirmed that a stay must be granted
mandatorily but listed out exceptions that are not exhaustive in the following terms:
[18] In my view, the general rule under s. 10(1) is that where proceedings are
brought in respect of a matter which is the subject of an arbitration agreement,
the peremptory word ‘shall’ makes it mandatory for the court to grant a stay of
those proceedings and refer the parties to arbitration … .
[19] In exceptional circumstances (the categories of which are not closed), stay
may be refused. Illustrations include:
(1) Under s. 10(1)(a), where the court (be it noted, not the arbitral tribunal)
finds that the agreement is null and void, inoperative or incapable of
being performed … .
(2) ‘[W]here the party applying for a stay has waived or may be estopped from
asserting his rights to insist on arbitration, such as where the parties have
P 66 agreed subsequently that disputes may be resolved by litigation. The facts
P 67 of such a case would fall to be decided in accordance with the usual
contractual analysis of estoppel and or waiver on the basis that the
arbitration agreement is “inoperative,” see s. 6(2) of the IAA. There are no
impediments, under the IAA, preventing the parties to an arbitration
agreement from agreeing to resolve the matter in any manner that they
may find more convenient. In such a case, the agreement to arbitrate will
be treated as having been waived as the parties are free to modify their
agreement at any time’: per VK Rajah JA in Tjong Very Sumito, supra, in
para [54].
(3)
(a) If one of the parties named in the legal proceedings is not a party to
the arbitration agreement;
(b) If the alleged dispute does not come within the terms of the
arbitration agreement; or
(c) If the application is out of time … .
(4) Where a party has taken any other steps in the court proceedings, as
stated in s. 10(1).
The Court of Appeal, in Kenneth Chung Kuo Ting & Anor v. John Tsang Shing Chi & Anor [2015]
1 CLJ 346 at paragraph 27, similarly held that a stay was mandatory in the following terms:
Section 10 of the Arbitration Act 2005, makes it mandatory for the court to stay
proceedings and to refer the parties to arbitration for determination of a
dispute if all the requirements thereunder are satisfied … .
Therefore, it is well established that it is mandatory for the courts to grant a stay under
section 10(1) once the requirements of this section are met and provided none of the
exceptions apply.

[E] ‘… Where a Party Makes an Application Before Taking Any Other Steps in the
Proceedings …’

41
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The key words here are ‘steps in the proceedings’. A party must apply for a stay before
taking any such steps.
There remains some degree of uncertainty as to what precisely amounts to such steps. This
uncertainty is unfortunate and could perhaps have been avoided if the Arbitration Act
2005 had adopted the words used in the 1985 Model Law, i.e. ‘first statement on the
substance of the dispute’, which appear clearer and less ambiguous than ‘other steps’.
The test as to what amounts to such a step is perhaps best explained by the Court of
Appeal, in Comos Industry Solution GmbH v. Jacob & Toralt Consulting Letrikon Sdn Bhd &
Ors [2011] 1 LNS 1770 at paragraph 14:
Our s.10 is differently worded. But the principles are the same. Whether an
action amounts to a step in the proceedings is determined by the nature of the
action and whether it indicates an unequivocal intention to proceed with the
suit and to abandon the right to refer the dispute to arbitration. An application
is not a step in the proceedings, if it does not express the willingness of the
defendant to go along with the determination of the courts instead of
P 67 arbitration. A defendant who has specifically stated in the application or
P 68 supporting affidavit that he intends to seek a stay is not estopped from
asserting his right to invoke arbitration. An application, which is made in the
event that the specific application for a stay is unsuccessful, is not a step in the
proceedings.
Essentially, the question is whether a party has shown an unequivocal intention to proceed
with the suit and abandon the right to refer the dispute to arbitration. This question will in
turn depend on the action taken by the party.
We will consider below various actions taken by parties and whether these have amounted
to steps in the proceedings.
[1] Appearance
The question of whether the filing of an unconditional appearance amounted to a step in
the proceedings under section 6 of the Arbitration Act 1952, which is the precursor to
section 10 of the Arbitration Act 2005, was finally settled, after much uncertainty, by the
Federal Court, in Sanwell Corp v. Trans Resources Corp Sdn Bhd & Anor [2002] 3 CLJ 213. The
Federal Court decided that the filing of an unconditional appearance did not amount to a
step in proceedings, as it was a mandatory step required by the Rules of the High Court
1980, the civil procedure rules applicable at the time.
Unfortunately, the question of whether the filing of an unconditional appearance amounts
to a step in the proceedings has been reopened since the coming into force of the
Arbitration Act 2005 on the grounds that section 10 differs from its precursor, section 6 of
the Arbitration Act 1952.
In this regard, the High Court, in Winsin Enterprise Sdn Bhd v. Oxford Talent (M) Sdn Bhd
[2010] 3 CLJ 634 at paragraph 17, appeared to suggest:
… that because of the language deployed in s 10(1) where stay is now mandatory
… applicants who seek to rely on an arbitration agreement must make the
application for stay promptly, even before the filing of an appearance.
However, the High Court, in Busuk Jamilah bte Salim & 70 Ors v. Siti Rahfizah Binti Mihaldin
& Anor [2009] LNS 1358 at pages 6 and 7, held that the filing of an unconditional
appearance did not amount to a step in the proceedings. In this regard, the High Court
followed Sanwell Corp supra.
Similarly, the High Court, in Life Plaza Sdn Bhd v. Pasukhas Construction Sdn Bhd [2012] 5 CLJ
120 at paragraph 23, held based on Sanwell Corp supra that the filing of an unconditional
appearance does not amount to a step in the proceedings.
The Rules of Court 2012 came into force on 1 August 2012. These new rules have abolished
the provisions on conditional appearance in Order 12 Rule 6. Further, the new rules
provide, by Order 12 Rule 9 and Rule 10(2):
Appearance not to constitute a waiver (O. 12 r. 9)
9. The appearance by a defendant in an action shall not be treated as a waiver
by him of any irregularity in the writ or service thereof or in any order giving
leave to serve the writ out of the jurisdiction or extending the validity of the writ
for the purpose of service.
…
P 68
P 69
Dispute as to jurisdiction (O. 12 r. 10)
…
(2) A defendant who wishes to contend that the Court should not assume
jurisdiction over the action on the ground that Malaysia is not the proper forum

42
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 for the dispute shall enter an appearance and, within the time limited for
serving a defence, apply to the Court for an order to stay the proceedings.
Therefore, it appears that the filing of an appearance under the Rules of Court 2012 will not
amount to a step in the proceedings. This was confirmed by the High Court, in Thien Seng
supra at paragraphs 20 and 21, where it was, inter alia, held:
[20] At the outset, let it be recorded that it is not in dispute that D1 had not
taken any other steps in the litigation proceedings other than entering its
appearance. That is acceptable for without it the Plaintiff may take a judgment
in default of appearance. The Federal Court in Sanwell Corp v. Trans Resources
Corp Sdn Bhd & Anor [2002] 2 MLJ 625 observed as follows at p 638:
We reaffirm that Sime Axa Assurance correctly decided that an entry
of an unconditional appearance does not constitute a step in the
proceedings within the meaning of s 6 of the Act. It is obvious that a
conditional appearance entered with a view of making an
application to set aside the writ or service of the writ under O 12 r 7
of the RHC would not amount to a step in the proceedings either. In
short, an entry of appearance under O 12 of the RHC would not
amount to a step in the proceedings within the meaning of s 6 of the
Act … .
[21] Though decided under the old section 6 of the Arbitration Act 1952 the same
principle would apply and more so when there is now no O. 12 r. 6 ROC on the
entry of conditional appearance and with that O.12 r.7 has been deleted too
with respect to an application to set aside writ arising from the entry of a
conditional appearance.
[2] Qualified Position
It is settled that, even if a party takes a step in the proceedings, if the party qualifies his
position by stating that the step is taken without prejudice to his right to apply for a stay,
then this will not amount to an unequivocal step whereby he abandons his right to
arbitration.
In this regard, the High Court, in Nam Fatt Corporation Bhd & Anor v. Petrodar Operating Co
Ltd & Anor [2010] 9 CLJ 732 at paragraph 75, held:
I am fortified in my view that the 1st defendant has not taken any further step in
the proceeding as they have applied promptly for a stay of the proceeding and
they have made it abundantly clear that their application to set aside the ad-
interim injunction is done without prejudice to and subject to their application
to set aside the service of the writ out of jurisdiction and to stay the proceeding
in this court. As was stated in Seloga Jaya Sdn Bhd (supra), resisting an
application for an interlocutory injunction by putting in evidence in affidavit
form and through counsel, appearing in court to argue against the injunction
cannot amount to ‘taking any other steps in the proceeding’. Otherwise the 1st
defendant would be in a Catch-22 situation. If he objects to the injunction he is
P 69 damned because that could be construed as taking a further step in the
P 70 proceeding by way of filing an affidavit to set aside the injunction. If he does
nothing to set aside the injunction the injunction will continue to be in force by
default if not by design of the plaintiffs. It is a case of head I win and tail you
lose! That cannot be the position of the law. Indeed there is a palpable
paradigm shift in the Arbitration Act 2005 towards affirming parties agreement
to go for arbitration and the court will only refuse the parties intention if the
defendant can be shown to have so irreversibly and irrevocably taken positive
further steps in the proceeding that one can affirmatively, assuredly and
avowedly say that the defendant has abandoned its intention to arbitrate
altogether.
This judgment was affirmed on other grounds by the Federal Court, in Petrodar Operating Co
Ltd v. Nam Fatt Corp Bhd (in liquidation) & Anor [2014] 6 MLJ 189.
Similarly, the Court of Appeal, in Comos Industry Solution GmbH v. Jacob & Toralt
Consulting Letrikon Sdn Bhd [2011] 1 LNS 1770 at paragraph 15, held:
The action of the appellant only gave away the following intention. Prayer (a) of
encl. 41, for an order to set aside the writ on the ground that German and not
local courts had jurisdiction, clearly evinced that the appellant was not
prepared to proceed with the suit. Prayer (b) of encl. 41, for an order ‘that the
first defendant be permitted 21 days from the date of an order herein to file the
defence in the event this Honourable Court dismisses the application herein
subject to the first defendant having the liberty to apply to this Honourable
Court for such orders as it considers appropriate and or necessary’, applied for
time to file a statement of defence. But that was not a prayer simpliciter, for
time to file a statement of defence, without qualification. That prayer was made
on the stated basis that it was only made if prayer (a) were dismissed and if the

43
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 appellant had the liberty to apply for such orders as it deemed ‘appropriate
and or necessary’. Prayer (b) itself did not state what orders that the appellant
would consider ‘appropriate and or necessary’. But that should not be a
mystery. In the affidavit filed in support of encl. 41, the appellant openly
reserved the right to refer the dispute to arbitration. Indeed, in all papers filed,
the appellant unceasingly challenged the jurisdiction of the court below and
reserved the right to refer the dispute to arbitration. The appellant indicated
only that it was against the dispute being tried by the court below. Given the
qualifications under which it was made, the prayer for time to file a statement
of defence was only a precautionary step to obviate the risk of a judgment in
default of pleadings, should prayer (a) be refused … .
The High Court, in Life Plaza Sdn Bhd v. Pasukhas Construction Sdn Bhd [2012] 5 CLJ 120 at
paragraph 30, appeared to extend this concept further by deciding that a defence filed
under protest would not amount to a step in the proceedings:
With the benefit of hindsight, the court finds that since the defendant’s
application for stay had been filed before it had taken any positive steps in the
proceedings; the court should have allowed encl. 4 to be heard before directing
the defendant to file its defence which could be considered as taking a positive
step in the proceedings. In the circumstances of this case and the court’s own
role in directing that the defence be filed, the court is of the considered view
that this act of filing the defence should be viewed in the context of ‘other
action’ as set out in Sanwell Corporation (supra). In light of para. 7 of the defence
and the many protestations from learned counsel that there had been no
abandonment of its rights to refer the dispute to arbitration, the court finds that
the filing of the defence on the express instructions of the court was not
P 70 indicative of an unequivocal intention to proceed with the suit and to abandon
P 71 its right to have the dispute disposed off by arbitration. As such, the court
finds that the filing of the defence in the circumstances of this case does not
amount to the defendant having taken a positive step in the proceedings.
The Court of Appeal, in Borneo Samadana Sdn Bhd v. Siti Rahtizah Mihaldin & Ors [2008] 5
CLJ 435 at paragraphs 7 and 8, considered a slightly different position, where a party
applied for stay and, in the event this was dismissed, applied for security for costs in the
alternative. The Court of Appeal held that the alternative prayer would not amount to a
step, as the primary prayer was for a stay.
[3] Resisting Injunction
The position is clear that merely resisting an application for an interlocutory injunction
does not amount to a step in the proceedings.
The High Court, in Nam Fatt Corporation supra at paragraph 75, as considered in §10.03[E][2]
supra, held that merely resisting an application for an interlocutory injunction by filing
affidavits and counsel submitting on the issues would not amount to a step in the
proceedings.
Similarly, the Court of Appeal, in AGIBS Engineering & Construction Sdn Bhd v. Paragon
Advance Solutions Sdn Bhd [2011] 1 LNS 1019 at paragraph 12, held:
The said application was made by the appellant at the beginning of the
proceedings before the appellant takes any other steps in the proceedings. The
respondent has raised the issue that the appellant has taken steps in the
proceedings when the appellant defended the respondents injunction
application. The court cannot agree with the respondent on this point. In
defending the respondent’s injunction application against the appellant, the
appellant cannot be said to have abandoned its right to a stay application
under s. 10 … .
The High Court, in Inai Kiara Sdn Bhd v. East Coast Economic Region Development Council
[2018] MLJU 1448 at paragraph 16(iii), also confirmed that a party opposing an application
for an interim injunction has not thereby taken a step in the proceedings, as such a party
has no choice but to oppose the application.
[4] Discovery
The courts have taken different views on whether a notice to produce documents, which is
the first step in the process of discovery, amounts to a step in the proceedings.
The High Court, in Life Plaza supra at paragraphs 25 and 26, held that such a notice did not
amount to a step in the proceedings on the following grounds:
[25] In this case the defendant had also served on the plaintiff a notice to
produce documents mentioned in the pleadings as well as a letter asking for
further and better particulars. The court notes the arguments of learned counsel
for the defendant that these were steps taken to determine what the exact
claim against the defendant was. The court is of the considered view that this
step taken by the defendant would fall within the category of ‘other action’ as

44
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 71 stated by the Federal Court in Sanwell Corporation. And to determine if the
P 72 serving of the said notice and letter amounts to its having taken a positive
step, the court would have to consider whether such action indicates an
unequivocal intention to proceed with the suit and to abandon its right to refer
to arbitration.
[26] In this regard, the court is in agreement with learned counsel for the
defendant that the serving of the notice and letter on the plaintiff does not
amount to the defendant having taken positive steps. The court is unable to see
how asking for particulars or for inspection of documents could be seen as
amounting to an unequivocal intention to proceed with the suit. As such, on this
score, the court finds that such action by the defendant does not amount to it
having taken any positive steps in the proceedings.
However, the High Court, in CLLS Power System Sdn Bhd v. Sara-Timur Sdn Bhd [2015] 1 LNS
149 at paragraph 33, held that such a notice amounted to a step in the proceedings:
In this case, the step taken by the Defendant, that is the issue and service of a
‘Notice To Produce Documents Referred to in Pleadings dated 4.12.2014
Pursuant to Order 24 Rule 10 of the Rules of Court 2012’ even before the filing of
this application on 12.12.2014, deprives the Defendant of this order for a
mandatory stay. Such a Notice issued under Order 24 Rule 10 serves as part of
the discovery process available for claims filed in Court. There are serious
ramifications and consequences upon the issue and service of such a Notice. A
party who is served with such a Notice must respond within 4 days to the Notice.
Where a party fails to comply with such a Notice, the other party may apply to
Court for an order of discovery.
In this regard, much will depend on the nature of the documents being sought by the
notice. If the documents sought are to ascertain the nature of the claim and allow the party
seeking the documents to decide once the nature of the claim is ascertained whether an
application for stay would be justified, the notice should not amount to a step.
[5] Resisting Winding-Up
The High Court, in NFC Labuan supra at paragraph 31, held that an affidavit filed to oppose
a winding-up petition would amount to a step in the proceedings:
Accordingly, the pursuit of the respondent’s resistance to the winding-up
petition by the filing and service of the affidavit in opposition, more so when
compounded with arguably the swift action taken by the respondent to file and
serve the said affidavit vis-à-vis its filing of this instant application for stay late
in the day, as well as its non-objection to the petitioner’s application for
extension of time to further challenge the respondent’s own affidavit, would all
render the same to amount to the taking of steps in the proceedings of the
winding-up petition that would thus prevent the proceedings to be stayed for
reference to arbitration under Section 10 of the AA. As such, this stay
application is unmeritorious and thus must fail.
P 72
P 73
[6] Defence
The High Court, in Tactical Force Sdn Bhd v. Nice Network Diversified Sdn Bhd [2011] 1 LNS
140 at paragraphs 92-94, effectively held that the filing of a defence would amount to a
step in the proceedings.
This would appear obvious. There are, however, various other factual permutations in
relation to the filing of a defence that have been considered by the courts.
In this context, the High Court has adopted a strict position, and held, in Winsin Enterprise
supra at paragraph 15, that seeking an extension to file a defence would amount to a step
in the proceedings. The same position was taken by the High Court, in Mun Seng Fook v. AIG
Malaysia Insurance Bhd [2018] MLJU 310 at paragraph 21.
On the other hand, the High Court, in Life Plaza supra at paragraph 30, decided that the
filing of a defence under protest would not amount to a step in the proceedings.
The question really is whether the step taken is unequivocal or otherwise. Where an
extension is sought, or even a defence is filed, under protest or without prejudice to a
party’s right to apply for a stay, this should not amount to a step in the proceedings.
[7] Before
The Court of Appeal, in PLB-KH Bina Sdn Bhd v. Hunza Trading Sdn Bhd [2014] MLJU 1427,
clarified that an application for stay should be made before taking any step in the
proceeding. After the application is made it appears that other steps may be taken.
In this regard, the Court of Appeal, in PLB-KH Bina supra at paragraph 47, held:
It was clear from that provision that for a stay to be considered by the court, the

45
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 party applying had to file for the same before taking any other step in the
subject proceedings itself. The application for stay here by PLB-KH Bina had
been filed first in time and the application to strike out was a subsequent
application. In our view therefore PLB-KH Bina’s was therefore not disentitled of
their right to seek a stay or to pursue with this appeal against the dismissal of
the prior application for stay before the court. We could not agree with Counsel
for Hunza Trading, therefore, that PLB-KH Bina had abandoned their application
for stay under s 10(1) AA 2005 or that this appeal had been rendered academic
now.

[F] ‘… Stay Those Proceedings and Refer the Parties to Arbitration …’

The key word here is ‘parties’. The High Court, in AV Asia Sdn Bhd v. Measat Broadcast
Network Systems Sdn Bhd [2010] 1 LNS 1601 at pages 9 and 10, confirmed, in accordance
with section 2 of the Arbitration Act 2005, that the word ‘parties’ used in section 10(1)
means parties to the arbitration agreement. This judgment was later affirmed by Federal
Court, although this issue did not arise, in AV Asia Sdn Bhd v. Measat Broadcast Network
Systems Sdn Bhd [2014] 3 MLJ 61.
Similarly, the Federal Court, in Jaya Sudhir a/l Jayaram v. Nautical Supreme Sdn Bhd & 2 Ors
P 73 (FC, 1 July 2019) at paragraphs 32, 38, 40 and 91, held that section 10 of the Arbitration Act
P 74 2005 only applied to a ‘party’ as defined in section 2, meaning a party to the arbitration
agreement. Conversely, section 10 did not apply to a person who is not a party to the
arbitration agreement. The question that arises is what happens when there is a party to
the proceeding in court who is not a party to the arbitration agreement. Traditionally, the
courts held that the presence of a party in the civil proceedings other than the party to the
arbitration agreement would not prevent a stay being granted. The proceedings involving
the party who is not a party to the arbitration agreement will also be stayed pending the
outcome of the arbitration.
In this regard, the Court of Appeal, in Renault SA v. Inokom Corporation Sdn Bhd & Anor and
other Applications [2010] 5 CLJ 32 at paragraphs 16-18, held:
[16] The fact that Tan Chong and TC Euro have been named as alleged co-
conspirators does not change the fact that a mechanism for resolving disputes
between Renault, Inokom and Quasar has been agreed upon. Therefore,
mechanism should be rightly invoked and the disputes resolved by arbitration
and not by litigation in court. The parties should honour art. 11 and give it life
and meaning, to resolve disputes amicably. A devious attempt to circumvent
art. 11, by instituting an action against Renault jointly with parties not subject to
the arbitration clause, should not be encouraged.
[17] The action as between Inokom, Quasar and the alleged co-conspirators (Tan
Chong & TC Euro, who were not parties to the arbitration clause) can be stayed
pending the outcome of the arbitration.
[18] We are not persuaded by counsel for Inokom and Quasar that the disputes
are inseparable and unsuitable for determination by an arbitral proceeding, as
it involves third parties to the master agreement who are not subject to the
arbitration clause. We are not persuaded that any award made by the arbitral
tribunal against Renault would not be binding and enforceable against Tan
Chong and TC Euro, to warrant the refusal of stay under s. 6 of the 1952 Act. We
are further not persuaded that it is undesirable to have two proceedings before
two different tribunals, who might reach inconsistent findings, to warrant the
refusal of stay under s. 6 of the 1952 Act. In any event, Tan Chong and TC Euro
have applied to have the claim as against them struck off summarily and if they
succeed, multiplicity of proceedings is a non issue.
The judgment in Renault supra was followed (13) by the High Court, in AV Asia supra at pages
9 and 10:
… I think the following principle of law is well settled by the decision of the
Court of Appeal in Renault SA v. Inokom Corporation Sdn Bhd & Anor and other
appeals (supra): the inclusion of third parties in an Action which are not subject
to an arbitration agreement will not be a ground to refuse stay of proceedings.
There is no scope for the court to refuse a stay of proceedings on the ground
that third parties are involved. The court will uphold the right to arbitration
notwithstanding the fact that there is a claim against a third party (see: Russell
on Arbitration, 23rd Edition paragraph 7-048).
P 74
P 75
Subsequently, the courts have taken a more nuanced approach in dealing with civil
proceedings that include persons who are a party to an arbitration agreement, as well as,
persons who are not a party to such an arbitration agreement. The courts, in such
situations, now recognize that they have four options:
(1) to stay the whole civil proceedings, including those against the persons who are not
party to the arbitration agreement. Here, the arbitral proceedings will proceed first

46
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 followed by the civil proceedings;
(2) to stay the civil proceedings between the persons who are party to the arbitration
agreement on condition that the arbitral proceedings between these persons only
proceed after the civil proceedings. Here, the civil proceedings will proceed first
followed by the arbitral proceedings;
(3) to stay the civil proceedings between the persons who are party to the arbitration
agreement and allow the civil proceedings between the persons who are not party to
the arbitration agreement and the arbitral proceedings to proceed. Here, the arbitral
proceedings and the civil proceedings will proceed concurrently; and
(4) to stay the civil proceedings on certain issues and allow other issues to proceed in
the arbitral proceedings and civil proceedings concurrently.
In deciding which of these four options to select, the courts will consider the overlap
between the arbitral proceedings and the civil proceedings in terms of:
(1) the parties;
(2) the issues;
(3) the factual matrix giving rise to the cause of action;
(4) the principal witnesses; and
(5) the relief and remedy sought.
The courts, in adopting this more nuanced approach, have been influenced by the
judgment of the Court of Appeal of Singapore, in Tomolugen Holdings Ltd and another
appeal v. Silica Investors Ltd; and other appeals [2015] SGCA 57. This can be seen from the
judgment of the Court of Appeal, in Protasco Bhd v. Tey Por Yee & Another Appeal [2018] 5
CLJ 299 at paragraphs 50 and 51.
The Federal Court, in Jaya Sudhir supra at paragraphs 60-62, 66-69, 81 and 98, held that,
when a person who is not a party to an arbitration agreement applies to restrain arbitral
proceedings, the courts would consider the factors usually considered when an application
is made for an interim injunction. These factors include whether there are serious issues to
be tried and where the balance of convenience lies.
The primary consideration is what would be the fairest approach to all parties. This
depended, when there were parallel civil and arbitral proceedings, on:
(1) whether there would be a multiplicity or duplicity of proceedings;
(2) whether there was a risk of inconsistent findings; and
P 75
P 76
(3) whether the interests of the person who was not a party to the arbitral proceedings
would be affected.
The Federal Court, in Jaya Sudhir supra at paragraph 91, recognized that ‘party autonomy
and self-restraint by courts when intervening in arbitral process’ was the policy and object
of the Arbitration Act 2005. However, such policy considerations did not apply to a person
who was not a party to an arbitration agreement, as the Arbitration Act 2005 would not
apply to such a person.

[G] ‘… Unless It Finds That the Agreement Is Null and Void, Inoperative or
Incapable of Being Performed.’
[1] Lean Towards Arbitration
This part of section 10(1) of the Arbitration Act 2005 should be read together with section
18(1), which provides:
18. Competence of arbitral tribunal to rule on its jurisdiction.
(1) The arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration
agreement.
Based on sections 10(1) and 18(1), both the courts and the arbitral tribunal have jurisdiction
to determine the existence and validity of an arbitration agreement. The courts have
leaned towards allowing the arbitral tribunal to determine these issues in accordance with
section 18(1).
In this regard, the High Court, in CMS Energy Sdn Bhd v. Poscon Corporation [2008] 1 LNS 543
at pages 8 and 9, held:
In my view the language used in that section [ie section 18] confers on the
arbitration a broad and wide powers to decide on issues raised before it – not
only the substantive issues but also on the point of preliminary objections as to
its jurisdiction. That section also allows any party to the arbitration who is not
happy with the preliminary rulings by the arbitrator to appeal to the High Court
against such rulings within 30 days of its receipt.
…

47
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 In my view if section 10 and section 18 of the Act are read together there is no
unmistakable intention of the legislature that the Court should lean towards
arbitration proceedings. Under section 10(1) of the Act, the Court shall stay all
proceedings before it in respect of a matter which is the subject of an
arbitration agreement, and refer the parties to arbitration unless the Court is
satisfied as to any of the condition in paragraph (a) or (b) of the section as
shown above. And in this case none of the condition is applicable.
P 76
P 77
[2] Section 29 of the Contracts Act 1950
The Court of Appeal, in Borneo Samudera Sdn Bhd v. Siti Rahfizah Mihaldin & Ors [2008] 5
CLJ 435 at paragraph 9, also clarified that an arbitration agreement itself cannot be void
under section 29 of the Contracts Act 1950 in the following terms:
To summarise, we are not in agreement with the learned judge that the
arbitration agreement is void. Exceptions 1 and 2 to s. 29 of the Contracts Act
1950 make that absolutely clear. These exceptions house the ratio in Scott v.
Avery [1856] 10 ER 1121, namely that an agreement to arbitrate does not oust the
jurisdiction of the ordinary courts and is therefore not illegal and void. Were it
otherwise, no arbitration clause would ever survive. We may add that we are
also satisfied, having regard to the facts of this case, the opposition to the stay
does not fall within s. 10(1)(a) or (b) of the Arbitration Act 2005.
In this regard, section 29 of the Contracts Act 1950 provides:
29. Agreements in restraint of legal proceedings void
Every agreement, by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract, by the usual legal
proceedings in the ordinary tribunals, or which limits the time within which he
may thus enforce his rights, is void to that extent.
Exception 1
Saving of contract to refer to arbitration dispute that may arise.
This section shall not render illegal a contract by which two or more persons
agree that any dispute which may arise between them in respect of any subject
or class of subjects shall be referred to arbitration, and that only the amount
awarded in the arbitration shall be recoverable in respect of the dispute so
referred.
Exception 2
Saving of contract to refer questions that have already arisen.
Nor shall this section render illegal any contract in writing, by which two or
more persons agree to refer to arbitration any question between them which
has already arisen, or affect any law as to references to arbitration.
Exception 3
Nor shall this section render illegal any contract in writing between the
Government and any person with respect to an award of a scholarship by the
Government wherein it is provided that the discretion exercised by the
Government under that contract shall be final and conclusive and shall not be
questioned by any court.
In this exception, the expression ‘scholarship’ includes any bursary to be
awarded or tuition or examination fees to be defrayed by the Government and
the expression ‘Government’ includes the Government of a State.
In the light of Exception 1 and 2 to section 29 of the Contracts Act 1950, this issue should not
have arisen, as it is clear that an arbitration agreement is not void under section 29.
P 77
P 78
[3] Fraud and Mistake
The courts have consistently held that an arbitration agreement will generally be wide
enough to cover disputes involving allegations of fraud or mistake.
In this regard, the High Court, in Winsin Enterprise Sdn Bhd v. Oxford Talent (M) Sdn Bhd
[2010] 3 CLJ 634 at paragraphs 10 and 11, held that a widely drafted arbitration clause
would cover disputes involving allegations of mistake:
[10] On the facts, the plaintiff’s submission is that the current proceedings are
not in respect of a matter which is the subject of an arbitration agreement.
According to learned counsel a claim for repayment of monies paid either
mistakenly or erroneously in excess falls outside the scope of cl. 34 of the
contract. This claim also does not relate to the works under the contract.

48
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Learned counsel for the defendant on the other hand submitted that the claim
for repayment is challenged primarily on grounds of accuracies of calculation. It
is related to the works under the contract.
[11] Having considered the language in cl. 34 of the contract it is clear that the
parties intended that the scope or type of matters that shall be compulsorily
referred to arbitration is very wide. Clause 34(1)(i) provides that ‘In the event
that any dispute or difference arises between the employer … and the
contractor, either during the progress or after completion or abandonment of
the Works regarding any matter or thing of whatsoever nature arising thereunder
… then such disputes or differences shall be referred to arbitration’. This
includes a dispute concerning overpayment in the manner described in the
statement of claim. Therefore the first condition in s. 10(1) is satisfied.
The High Court, in Busuk Jamilah Bte Salim & 70 Ors v. Siti Rahfizah Binti Mihaldin & Anor
[2009] 1 LNS 1358 at page 7, held that allegations of fraud may be determined under a
widely drafted arbitration agreement:
… It is clear to me that the question as to whether the Sale and Purchase
Agreements are null and void and of no legal effect due to the alleged
fraudulent or reckless misrepresentation by the defendants is a question that
comes within the scope of clause 17 of the Sale and Purchase Agreements,
namely ‘any dispute or difference between the parties arising out of or in
relation to this Agreement’.
Similarly, the Court of Appeal, in Protasco Bhd v. Tey Por Yee & Another Appeal [2018] 5 CLJ
299 at paragraph 59, held that an arbitration agreement should be interpreted widely to
include all disputes between the parties, including disputes involving conspiracy and
fraud.
[4] Multiplicity
This issue has been considered in §10.03 [F] supra in the context of the use of the word
‘parties’ in section 10(1) of the Arbitration Act 2005. The argument has also been made that,
where there are parties to the civil proceedings, who are not parties to the arbitration
agreement, the arbitration agreement is ‘incapable of being performed’, as all the parties
P 78 to the civil proceedings will not be party to the arbitration and there is accordingly a risk
P 79 of multiplicity of proceedings and conflicting decisions. However, these arguments have
been rejected by the courts, who have held that multiplicity of proceedings is not a ground
for declining a stay. (14) This is now subject to the more nuanced approach adopted by the
courts that allows for the four options considered in §10.03 [F] supra.
[5] Incomplete Agreement
The High Court, in Inai Kiara Sdn Bhd v. East Coast Regional Development Council [2018]
MLJU 1448 at paragraphs 16(viii)-(x), held that in a multi-tier dispute resolution clause,
where a claimant was required to refer a dispute to an officer named in the appendix to
the contract prior to referring the dispute to arbitration, the failure of the parties to
specify the officer named in the appendix to the contract resulted in the arbitration
agreement being inoperative and incapable of being performed.
However, where such an officer is named in the appendix to the contract, the claimant
must refer the dispute to the officer before referring the dispute to arbitration. The
claimant cannot attempt to circumvent the multi-tier dispute resolution clause by not
referring the dispute to the officer and then contending that the arbitration agreement is
inoperative and incapable of being performed. This was confirmed by the High Court, in
Maya Maju (M) Sdn Bhd v. Putrajaya Homes Sdn Bhd [2018] MLJU 1629 at paragraphs 23-27
and 77. (15)
These judgments are of significance, as these multi-tier dispute resolution clauses which
require a reference to an officer named in the appendix prior to arbitration are found in
the PWD standard forms of building contract.
[6] Absence of Disputes
Section 10(1)(b) of the Arbitration Act 2005 used to provide that a stay shall be granted
unless there is, in fact, no dispute between the parties. This subsection was deleted by the
Arbitration (Amendment) Act 2011.
After the amendment, an ingenuous argument was raised to revive section 10(1)(b). The
argument was that, in the absence of a dispute, the arbitration agreement became
‘inoperative or incapable of being performed’, as there was no dispute to be referred to
arbitration.
However, this argument was rejected by the High Court, in Zaq Construction Sdn Bhd & Anor
v. Putrajaya Holdings Sdn Bhd [2014] 4 CLJ 895 at paragraphs 63-65, where it was held:
[63] Moving on to the statutory constraints or grounds for refusing a stay under
sub-s. 10(1). The plaintiffs argued that the arbitration agreement is inoperative
P 79 or incapable of being performed because of the position of the statement of

49
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 80 final accounts. With this statement and what it represents, there is no dispute
or difference to refer to arbitration in which case, the arbitration agreement is
said to be inoperative and incapable of being performed.
[64] With respect, I disagree. The statutory constraints in sub-s. 10(1) refer to
those elements, where if present, will render the arbitration agreement invalid
or unenforceable by reason, say of illegality or frustration. For the arbitration
agreement to be inoperative or incapable of being performed, those constraints
must relate to the arbitration agreement itself.
[65] These terms also refer to situations or circumstances where it is legally or
practically impossible to make a valid reference to arbitration pursuant to the
arbitration clause or arbitration agreement. For instance, the arbitration
agreement provides for a non-existent venue; or the time limited for its
invocation has lapsed …

[H] ‘… That There Is In Fact No Dispute Between the Parties with Regard to the
Matters to Be Referred.’
As stated above, section 10(1)(b) of the Arbitration Act 2005 used to provide that a stay
should not be granted when there was in fact no dispute between the parties. This
subsection was deleted by the Arbitration (Amendment) Act 2011 to prevent the courts
from having to assess whether a dispute in fact existed and thereby encroach into the
jurisdiction of the arbitral tribunal.
We consider below the position both prior and subsequent to the amendment. The position
prior to the amendment is considered largely for historic and academic purposes. Some of
the positions taken prior to the amendments have also informed the current position.
Prior to the amendments, the courts were reluctant to hold that there was no dispute
between the parties. Any dispute was viewed as being sufficient unless the matter was
plain and obvious and the court could determine that defence was frivolous and vexatious
without a meticulous examination of the merits. Furthermore, it was sufficient for a dispute
to exist if an assertion to this effect was made even if such an assertion could easily be
demonstrated to be wrong.
In this context, the High Court, in Bina Par Development Sdn Bhd v. Manoharan Paranjothy
[2009] 1 LNS 415 at page 7, held that the penultimate certificate issued under a building
contract could be disputed.
Similarly, the High Court, in Gadang Engineering (M) Sdn Bhd v. Bluwater Developments Bhd
[2010] 6 CLJ 277 at paragraph 8, held that final accounts issued under a building contract
could be disputed, where the final accounts had not been issued in accordance with the
mechanism of the building contract and there was a dispute as to whether the person who
signed these accounts had the authority to do so.
The High Court, in FSBM Holdings v. Technitium Sdn Bhd [2010] MLJU 1103 at page 2, held
that a claim for goods sold and delivered could be disputed and explained the principles
behind section 10(1)(b) in the following terms:
As regards requirement (b), the learned commentators are of the view that
P 80 Malaysian courts should adopt the ‘bona fide dispute’ test, instead of the
P 81 ‘arguable grounds for disputing liability’ test. It must be said however that
even under the previous section 6, the Federal court in Tan Kok Cheng & Sons
Realty Co v Lim Ah Pat (t/a Juta Bena) [1995] 3 MLJ 273, held there was no
requirement for the dispute to be bona fide for the court to exercise its
discretion to order a stay. Any dispute difference will suffice, as a court is not
required to critically examine the merits of the claim. The court may be
justified in refusing stay only in plain and obvious cases, where a reasonable
tribunal, without undertaking a meticulous examination the merits, is bound to
hold that the issues raised by a Defendant is frivolous or vexatious. The court’s
discretion to refuse a stay is therefore limited to cases involving fraud, or where
there is no dispute that falls within the Arbitration Clause. Since the court is not
required to critically examine the merits of the claim, evidently the approach
to the court’s exercise of discretion under section 10 cannot be equated with
the approach the court takes when considering a summary judgment
application. This means to say the existence of a bona fide dispute should be
taken as meaning nothing more than the existence of some dispute which can
be referable to the Arbitration Agreement, and if it exists, the action should be
stayed pending arbitration … .
The High Court, in MCM Bulk shipping (M) Sdn Bhd v. Raz Intan Industries Sdn Bhd [2012]
MLJU 401 at page 2, clarified that a dispute could exist even where there was no reply to
the notice of arbitration.
After the amendments, the courts have held that it is no longer necessary for a party to
identify the dispute, or for the courts to delve into the facts, as this would amount to an
encroachment into the role to be played by the arbitral tribunal.
In this context, the Court of Appeal, in TNB Fuel Services Sdn Bhd v. China National Coal

50
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Group Corp [2013] 1 LNS 288 at paragraph 24, held:
The present form of Section 10 of the Arbitration Act 2005 is the result of the
amendment to that section which came into force on 1st July 2011 (Act A1395). It
is generally accepted that the effect of the amendment is to render a stay
mandatory unless the agreement is null and void or impossible of performance.
The Court is no longer required to delve into the facts of the dispute when
considering an application for stay … .
Subsequently, the High Court, in Zaq Construction Sdn Bhd & Anor v. Putrajaya Holdings Sdn
Bhd [2014] 4 CLJ 895 at paragraph 28, held:
Save for this amendment to sub-s. 10(1), the intention in sub-s. 10(1) has always
been the same. In my view, from the time of its first enactment in 2005, the
provisions on stay have always been in mandatory terms. What this amendment
has done is to remove what may be said to be a somewhat cumbersome and
sometimes difficult to grapple with exception found in para. (b). There was
frequently concern that in determining whether or not there was in fact a
dispute between the parties, the court was embarking on an unnecessary
journey and intervening on what was understood as autonomous party choices.
The Federal Court, in Press Metal supra at paragraph 33, confirmed that:
What the court needs to consider in determining whether to grant a stay order
under the present section 10(1) (after the 2011 Amendment) is whether there is
in existence a binding arbitration agreement or clause between the parties,
P 81 which agreement is not null and void, inoperative or incapable of being
P 82 performed. The court is no longer required to delve into the details of the
dispute or difference. (see TNB Fuel Services Sdn Bhd (supra)). In fact the
question as to whether there is a dispute in existence or not is no longer a
requirement to be considered in granting a stay under section 10(1). It is an
issue to be decided by the arbitral tribunal.
The High Court, in Rightmove Sdn Bhd v. YWP Construction Sdn Bhd & Anor [2015] 7 MLJ 687
at paragraph 16, also held:
For our purposes, learned counsel for the plaintiffs in his submission said that in
3.3 ‘However, the 1st defendant has failed to identify what are the disputes
which necessitate or should be referred to arbitration.’ Surely such assertion
could only stand in the old s 10(1) (see para (10) hereinabove) we are here
dealing with the amended s 10(1) (see para (14) hereinabove). From the short
history of the case the first defendant had fulfilled the following pre-condition:
(i) the proceedings have been brought before the court; (ii) there was an
agreement between the parties which contains an arbitration clause and (iii)
the applicant has not taken any other steps in the proceedings. The plaintiffs
can only challenged the defendant’s application for a stay if he could establish
the agreement between the parties is null and void, inoperative or incapable of
being performed. There is nothing of that sort here. I do not see this being
raised in the plaintiff’s affidavit. I shall not delve into this as it is not the
plaintiff’s case that the agreement was null and void, inoperative or incapable
of being performed. But I need only say even if the agreement has been
terminated a stay of proceeding would still be allowed under s 10 (see Agibs
Engineering & Construction Sdn Bhd v Paragon Advance Solutions Sdn Bhd [2011]
1 LNS 1019).
Similarly, the High Court, in Juang Setia Sdn Bhd v. Tindak Murni Sdn Bhd [2018] MLJU 229 at
paragraphs 20 and 25, held that:
[20] The question as to whether there is a dispute in existence or not is no longer
a requirement to be considered in granting the stay. A stay of proceedings is a
stay of proceedings which have already been filed in court. Thus, an application
for a stay of proceedings can only be filed by the defendant after the plaintiff
had commenced proceedings in court, but before the defendant takes any other
steps in the proceedings.
…
[25] The arbitrator has jurisdiction to deal with all the matters and issues
brought up by the parties. This court is no longer required to delve into the
details of the dispute or difference. The court should lean more towards
granting a stay pending arbitration under s. 10(1) of the 2005 Act, even in cases
where the court is in some doubt about the validity of the arbitration clause or
where it is arguable whether the subject matter of the claim falls within or
outside the ambit of the arbitration clause. In fact the question as to whether
there is a dispute in existence or not is no longer a requirement to be
considered in granting a stay under Section 10(1) Arbitration Act 2005. See TNB
Fuel Services Sdn Bhd v. China National Coal Group Corp [2013] 1 LNS 288 CA.
P 82

51
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 82
P 83
[I] ‘The Court, in Granting a Stay of Proceedings Pursuant to Subsection (1), May
Impose Any Conditions as It Deems Fit.’
The courts are entitled under section 10(2) of the Arbitration Act 2005 to ‘impose any
conditions’ when granting a stay. The courts have availed themselves of this provision to
impose conditions when granting a stay.
For example, in Majlis Ugama Islam Dan Adat Resam Melayu Pahang v. Far East Holdings
Bhd & Anor [2007] 10 CLJ 318 at paragraph 22, the High Court affirmed an order made by the
Session Court, which granted a stay and, as a condition, referred the matter to the Director
of the Kuala Lumpur Regional Centre for Arbitration to appoint an arbitrator under section
13(5) of the Arbitration Act 2005.
The High Court, in Gadang Engineering (M) Sdn Bhd v. Bluwater Developments Bhd [2010] 6
CLJ 277 at paragraph 11, granted an application for stay on condition that the arbitral
proceedings be completed within one year, failing which, the party who had applied for
summary judgment be entitled to proceed with that application.
The High Court, in FAMG Idaman Resources v. Jasmada Sdn Bhd [2018] MLJU 1081 at
paragraphs 33, 36, 45-52 and 64 and 65, recognized that when a stay is granted under
section 10, it is the plaintiff in the civil proceedings that is compelled to commence
arbitral proceedings if the plaintiff wishes to pursue their claims. Despite recognizing this,
the High Court granted the stay on condition that the defendant in the civil proceedings
commence arbitral proceedings within thirty days. The grounds for this unusual condition
appear to be that the defendant did not dispute the plaintiff’s claim but had a
counterclaim in excess of such a claim. Furthermore, the plaintiff was in financial difficulty.
As can be seen from the foregoing, section 10(2) of the Arbitration Act 2005 allows for a
diverse range of conditions to be imposed by the courts when granting the stay.

[J] ‘This Section Shall Also Apply in Respect of an International Arbitration, Where
the Seat of Arbitration Is Not in Malaysia.’
Section 10(4) of the Arbitration Act 2005 was introduced by the Arbitration (Amendment)
Act 2001.
Section 10(4) was introduced to clarify that a stay may be granted for an international
arbitration seated outside Malaysia.
This clarification was necessary, as it had been argued, albeit unsuccessfully, in Innotec
Asia Pacific Sdn Bhd v. Innotec GmbH [2008] 8 CLJ 304, that in the light of section 3, the
Arbitration Act 2005 only applied to domestic and international arbitration with a seat in
Malaysia.
It is now clear that a stay may be granted with respect to an international arbitration with
a seat outside Malaysia. This is consistent with Article 1(2) of the 1985 Model Law.
P 83
P 84

§10.04 EFFECT OF A STAY

The courts have also considered the effect of granting a stay on subsequent proceedings in
court.
The Court of Appeal, in Kenneth Chung Kuo Ting & Anor v. John Tsang Shing Chi & Anor [2015]
1 CLJ 346, considered a situation where the High Court had given a judgment based on
admissions after granting a stay. The Court of Appeal held that the High Court had no
jurisdiction to give such a judgment after granting a stay. The Court of Appeal, in Kenneth
Chung supra at paragraph 21, held:
The effect of the order is very clear ie, all further proceedings in the action in
question be stayed and the parties be referred to arbitration. The stay order
was still in force at the time when the learned Judicial Commissioner made the
order under O. 27 r. 3 of the RHC 1980 on 14 June 2010 against the appellants.
There was no appeal against the said order. Therefore any further proceedings
instituted by the plaintiffs (including their application under O. 27 r. 3 of the
RHC 1980) must be stayed pending determination of the dispute by the
arbitrator or until the arbitration process completed. The learned Judicial
Commissioner has no jurisdiction to make a further order in relation to the
action, unless the earlier stay order has been set aside.
The High Court, in UBA Urus Bina Asia Sdn Bhd v. Quirk & Associates Sdn Bhd & Anor [2016] 4
CLJ 468, considered a situation where the Sessions Court after granting a stay directed a
party to commence arbitration within seven days or forego its right to arbitration. The High
Court held that once the stay had been granted, the Sessions Court was functus officio and
should not have imposed any such conditions. If the Sessions Court was minded to impose
such conditions, the Sessions Court should have done so when granting the stay pursuant to
section 10(2) of the Arbitration Act 2005 and not subsequently. The High Court, in UBA Urus

52
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 supra at paragraphs 22, 26 and 27, held:
[22] When an order for stay is granted under s. 10, it is not to say that the court
has no jurisdiction to hear the dispute in the first place for the court has that
jurisdiction. It, however, declines to do so only because it has chosen to give
effect to the parties’ agreement to arbitrate their disputes. Hence, the words
‘refer the parties to arbitration’. By that agreement to arbitrate, or the
arbitration agreement, the parties have made their choice of forum resolution
of dispute and that is the basic concept behind party autonomy. In short, there
is an agreement to arbitrate rather than agreement to litigate. When the court
grants an order of stay, the order is not dependent on arbitration or arbitration
proceedings being afoot, proposed or brought; it is dependent on the very
existence of an agreement to arbitrate.
…
[26] Here, there was no appeal following the decision of the learned Sessions
Court Judge. More important and of relevance for our present purpose is that at
the material time of the making of the order, the court did not deem it fit
impose any terms or conditions to the order of stay that was granted. If the
court was of the view that conditions or terms ought to be imposed under sub-s.
10(2), such terms or conditions then ought to have been imposed at the time the
order of stay was granted. Once that order of stay under sub-s. 10(1) has been
P 84 made, and the order has been sealed or perfected; there is nothing left before
P 85 the court. The court is clearly functus officio. The court does not concern itself
nor does it need to concern itself with the mechanism or details of the
procedure behind that reference to arbitration. That is left entirely to the
parties.
[27] In this case, the order of the Sessions Court dated 30 September 2015 was a
complete order granted with no other terms except an order as to costs. Hence,
the directions and decisions of the court given subsequent to that date,
especially on 5 November 2015, whether under sub-s. 10(2) or otherwise, are
clearly wrong and invalid. These orders made after 30 September 2015 are
certainly not orders or decisions that are appealable given that they do not
form part of that order of 30 September 2015.
Therefore, it is clear that once a stay is granted without conditions, the courts have no
jurisdiction over the matter and are functus officio. This is, of course, subject to any
application being made to the courts subsequently, for example for interim measure or for
enforcement.
P 85
P 86

11. Arbitration Agreement and Interim Measures by High Court

(1) A party may, before or during arbitral proceedings, apply to a High Court for any interim
measure and the High Court may make the following orders for the party to –
(a) maintain or restore the status quo pending the determination of the dispute;
(b) take action that would prevent or refrain from taking action that is likely to cause
current or imminent harm or prejudice to the arbitral process;
(c) provide a means of preserving assets out of which a subsequent award may be
satisfied, whether by way of arrest of property or bail or other security pursuant to
the admiralty jurisdiction of the High Court;
(d) preserve evidence that may be relevant and material to the resolution of the
dispute; or
(e) provide security for the costs of the dispute.
(2) Where a party applies to the High Court for any interim measure and an arbitral
tribunal has already ruled on any matter which is relevant to the application, the High
Court shall treat any findings of fact made in the course of such ruling by the arbitral
tribunal as conclusive for the purposes of the application.
(3) This section shall also apply in respect of an international arbitration, where the seat of
arbitration is not in Malaysia.

§11.01 INTRODUCTION
Section 11 of the Arbitration Act 2005 allows the High Court to grant various forms of interim
measures in aid of arbitral proceedings. Section 11 like section 10 of the Arbitration Act
2005 gives effect to the arbitration agreement but in another context. While section 10
excludes the jurisdiction of the courts over proceedings that are the subject matter of an
arbitration agreement, section 11 allows for the courts to grant interim measures. This is
because such interim measures by the courts may be necessary to aid the arbitral
proceedings. (16)
Section 11 of the Arbitration Act 2005 is based on Article 9 of the 1985 Model Law. Article 9
of the 1985 Model Law provides as follows:

53
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Article 9. Arbitration agreement and interim measures by court
It is not incompatible with an arbitration agreement for a party to request,
before or during arbitral proceedings, from a court an interim measure of
protection and for a court to grant such measure.
P 86
P 87
Section 11 of the Arbitration Act 2005 differs from Article 9 of the 1985 Model Law insofar as
it is not expressly provided that ‘it is not incompatible with an arbitration agreement’ for a
party to apply for an interim measure. These words in Article 9 make it clear that an
application to the courts for interim measures is not prohibited by an arbitration
agreement and also does not amount to a waiver of the arbitration agreement. (17)
As these words usefully clarify that such applications are not a waiver, it is unclear why
they were not included in section 11 of the Arbitration Act 2005.
Apart from this, section 11 of the Arbitration Act 2005 differs from Article 9 of the 1985
Model Law in that the various types of interim measures that can be granted by the High
Court are listed under section 11(1). This list of interim measures was substituted by the
Arbitration (Amendment) (No 2) Act 2018. The amendment was to ensure that the type of
interim measures that may be granted by the High Court under section 11(1) was the same
as the measures that may be granted by the arbitral tribunal under section 19(2), which in
turn reflects Article 17(2) of the 2006 Model Law. The interim measures under section 11(1)
are now identical with the measures under Article 17(2) save that:
(1) the words ‘whether by way of arrest of property or bail or other security pursuant to
the admiralty jurisdiction of the High Court’ in section 11(1)(c) are not found in Article
17(2)(c); and
(2) section 11(1)(e) is not found in Article 17(2).
Prior to the amendment in 2018, section 11(1) provided for the following interim
measures:
(a) security for costs;
(b) discovery of documents and interrogatories;
(c) giving of evidence by affidavit;
(d) appointment of a receiver;
(e) securing the amount in dispute, whether by way of arrest of property or bail or
other security pursuant to the admiralty jurisdiction of the High Court;
(f) the preservation, interim custody or sale of any property which is the subject
matter of the dispute;
(g) ensuring that any award which may be made in the arbitral proceedings is not
rendered ineffectual by the dissipation of assets by a party; and
(h) an interim injunction or any other interim measure.
P 87 The interim measures in section 11(1) though similar to the measures available prior to the
P 88 amendment in 2018 are not identical. Generally:
(1) the current section 11(1)(a) corresponds with the former section 11(1)(h), with the
former section 11(1)(f) as a particular type of interim injunction;
(2) the current section 11(1)(b) does not directly correspond with any provision of the
former section 11(1);
(3) the current section 11(1)(c) corresponds with the former section 11(1)(e);
(4) the current section 11(1)(d) is a particular form of the former section 11(1)(h), which
was general;
(5) the current section 11(1)(e) corresponds with the former section 11(1)(a); and
(6) the current section 11(1) does not expressly provide for the interim measures listed
under sections 11(1)(b), (c) and (d).
Section 11(2) of the Arbitration Act 2005 is not found in the 1985 Model Law. Section 11(2)
attempts to grapple with the issue of a potential conflict between the findings of the
arbitral tribunal and the High Court by providing that any findings of fact by the arbitral
tribunal will be binding on the High Court. The 1985 Model Law does not attempt to deal
with this issue or the narrower issue of a potential conflict between interim measures
ordered by the courts and the arbitral tribunal under Articles 9 and 17 of the 1985 Model
Law, respectively. (18)
Section 11(3) of the Arbitration Act 2005 allows the High Court to grant interim measures in
aid of an international arbitration with a seat outside Malaysia. This reflects Article 1(2) of
the 1985 Model Law, which makes an exception for Article 9.
While section 11 of the Arbitration Act 2005 is based on Article 9 of the 1985 Model Law,
Article 9 is in turn based on Article 26(3) of the 1976 UNCITRAL Arbitration Rules, which
provides:
A request for interim measures addressed by any party to a judicial authority
shall not be deemed incompatible with the agreement to arbitrate, or as a

54
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 waiver of that agreement.
This is now reflected in Article 26(9) of the 2013 UNCITRAL Arbitration Rules, which forms
part of the 2018 AIAC Arbitration Rules.

§11.02 GENERAL PRINCIPLES

General principles applicable to section 11(1) of the Arbitration Act 2005 have been
developed by the courts. These principles were comprehensively summarized by the High
Court, in Bumi Armada Navigation Sdn Bhd v. Mirza Marine Sdn Bhd [2015] 5 CLJ 652. These
principles are considered below in the sequence they were set out in Bumi Armada supra.
The judgment of the High Court, in Bumi Armada supra, was affirmed by the Court of Appeal.
P 88
P 89
[A] Cause of Action
The applicant must have a cause of action against the respondent. In this context, the High
Court, in Bumi Armada supra at paragraph 47(a), held:
the applicant must have a cause of action against the party whom interim relief
is sought. In this regard, I rely on a case concerning an application for an
interlocutory restraining injunction decided by the Supreme Court in Khoo Soo
Teong v. Khoo Siew Ghim & Anor [1991] 3 CLJ 2063; [1991] 1 CLJ (Rep) 212; [1991] 3
MLJ 158, at 159.

[B] Arbitration Agreement

There must be an arbitration agreement as defined under section 9 of the Arbitration Act
2005, which is considered in §9.01, §9.02 and §9.03 supra. (19)

[C] Interim in Nature

The measures applied for must be interim in nature and should not be permanent in
effect. In this context, the High Court, in Metrod (Singapore) Pte Ltd v. GEP II Beteiligungs
GmbH & Anor [2013] 1 LNS 324 at paragraph 16, held:
… An application for such interim reliefs in the nature as set out at (a) to (h) of
section 11(1) is intended to be of an interim nature; and not permanent. It is also
intended to support, assist, as well as facilitate the arbitration proceedings … .
This was followed by High Court, in Bumi Armada supra at paragraph 47(c), which further
emphasized, in practical terms, that measures of an ‘interim’ nature should be subject to
variation or discharge by a subsequent order of the courts or the arbitral tribunal:
… if the court grants any interim relief under s. 11(1) AA, such relief should only
have interim effect and may be subject to the following circumstances:
(i) the court has the subsequent power to vary and/or discharge the interim
relief in question; and/or
(ii) the arbitral tribunal in question should be empowered by the court
granting the interim relief, to vary the interim relief if there are
subsequent facts or circumstances to necessitate such a variation. If the
court granting the interim relief, grants power to the arbitral tribunal to
vary the interim relief pending the disposal of arbitration, there is no
necessity for parties to ‘return’ to court for any variation of the interim
relief. This will save precious judicial time and effort in hearing any
application to vary any interim measure previously granted by the court
under s. 11(1) AA … .
P 89
P 90
[D] Aid the Arbitration
The interim measures should aid and not impede the arbitral proceedings. This principle
has been repeatedly emphasized by the courts. For example, the High Court, in Merino-Odd
Sdn Bhd v. PECD Construction Sdn Bhd [2009] 1 LNS 718 at paragraph 4(e), held:
Notwithstanding the above case laws, court is given wide powers as interim
measures to ensure a successful outcome of the arbitration proceedings. This is
clearly spelt out in section 11 of AA 2005 which the plaintiff is in essence relying
on. However, court must be very cautious in granting orders which may delay or
impede arbitration proceedings.
Similarly, the High Court, in Jiwa Harmoni Offshore Sdn Bhd v. Ishi Paower Sdn Bhd [2009] 1
LNS 849 at paragraph 2(a), held:
The powers granted to court pursuant to section 11 are powers which are not
meant to be oppressively invoked by a party to arbitration proceedings. It must

55
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 be exercised with utmost care and circumspection to ensure and support the
arbitration mechanism and not do any act which will stifle the arbitral process.
In addition, when such powers are also vested with the arbitrator, the
application must first be made before the arbitrator …
The High Court, in Cobrain Holdings Sdn Bhd v. GDP Special Projects Sdn Bhd [2010] 1 LNS
1834 at pages 9, 18 and 19, held:
Thus there is a clear overlap between section 11(1)(a), (b), (c) and (f) with section
19(1)(a), (b), (c) and (d). Going by the basic principles as stated earlier, where
there is a concurrent jurisdiction, a party should first apply before the arbitral
tribunal, unless there are countervailing factors, since the role of the High Court
is to ‘support arbitration’ … .
…
In this connection I find the principle stated in NCC International AB v. Alliance
Concrete Singapore Pte Ltd, supra, especially persuasive and useful. The
Singapore Court of Appeal has, as indicated earlier, clearly specified some
instances where the court of law may intervene, namely where third parties over
whom the arbitral tribunal has no jurisdiction are involved, where matters are
very urgent or where the court’s coercive powers of enforcement are required.
And these powers should be seen as powers to support the arbitral process.
These principles fit well within the general corpus of arbitration cases dealing
with interim measures, and in particular cases where applications are made to
secure an award sum. Even where a sum has been awarded after an arbitration,
the law does not confer an automatic right to have it secured by a court order
unless the applicant provides some justification to the satisfaction of the court
… the stress is on the court’s jurisdiction to achieve justice between the parties
and a balancing of benefit and prejudice between them. The effect of an interim
measure granted should additionally not be oppressive to the Defendant.

P 90 The High Court, in Metrod supra at paragraph 16 made similar observations and went on to
P 91 hold at paragraph 18 that:
It is observed that the orders sought here are not confined to the contracting
parties. This application may then be made to Court without having first being
made to the arbitral tribunal … the Court has jurisdiction to hear and grant
interim measures even where arbitration has already commenced elsewhere.
The simple existence of arbitration cannot be a bar to this application given the
terms upon which this power is predicated.
The High Court, in Interactive Brokers LLC v. Neo Kim Hock & Ors [2014] 8 CLJ 747 at
paragraph 59, held:
The submission by the defendants that the injunction should not be allowed as
this can be requested and given in the arbitration itself cannot with respect
hold water as the provision of s. 11 of the AA as narrated earlier do allow for
parties to resort to the High Court for the injunction pending arbitration.
The High Court, in Bumi Armada supra at paragraphs 47(d) and 52, followed Metrod supra
and held that:
[47] (d) the interim relief must support, assist, aid and/or facilitate the
proposed arbitral proceedings – Metrod (Singapore) Pte Ltd. If arbitral
proceedings are not subsequently commenced or if the interim relief in
question does not support, assist, aid and/or facilitate the proposed arbitral
proceedings:
(i) the application for and the granting of interim relief may constitute an
abuse of court process … .
(ii) the interim relief granted may oppress the party who is the subject matter
of the interim relief.
I must point out that s. 11(1) AA does not provide that the court’s power to grant
relief is ‘for the purposes of and in relation to arbitral proceedings’ as provided
in s. 44(1) of the 1996 Act. It is hoped that the legislature may clarify this matter
as the court’s power to grant any interim measure under s. 11(1) AA should be ‘for
the purposes of and in relation to arbitral proceedings’; and
…
[52] In view of the above reasons, especially the court’s wide power under s. 11(1)
AA to grant interim measures even before the commencement of arbitral
proceedings, I reject the defendant’s contention that instead of filing the OS,
the plaintiff should have applied to the arbitral tribunal for interim relief under
s. 19(1)(d) AA … .
If I have acceded to the above submission by the defendant, this will render s.

56
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 11(1) AA ineffective and a party to an ‘arbitration agreement’ will not be able to
obtain any interim relief in the interest of justice … .
The High Court, in IJM Construction Sdn Bhd v. Lingkaran Luar Butterworth (Penang) Sdn Bhd
[2018] 7 MLJ 341 at paragraphs 12 and 13, held:
[12] There is nothing in AA which stipulates that the arbitrator’s exercise of
powers under s 19 shall be to the exclusion of the court’s exercise of powers
under s 11, nor any statutory provision to the effect that the arbitrator’s decision
under s 19 is final and binding upon the court. Section 11(2) by specifically
limiting the conclusiveness to the arbitrator’s findings of fact, would imply that
P 91 the part of the arbitrator’s ruling or decision on interim measure other than the
P 92 findings of fact are open to reconsideration and fresh decision by the High
Court under a s 11(1) application.
[13] It follows this court has the power to hear the application under s 11 and res
judicata cannot be applied to the extent of nullifying or defeating the express
statutory provisions of ss 11 and 19.
The Court of Appeal, in Obnet Sdn Bhd v. Telekom Malaysia Berhad [2018] MLJU 1400 at
paragraphs 23 and 26, inter alia, held:
[23] In this respect, we are constrained to observe that although the learned
Judge accepted that he was bound by the findings of fact relevant to the
discovery application, he nevertheless, in our respectful view, treated the
discovery application as if it was an appeal. With respect, the learned Judge
was bound by the learned Arbitrator’s finding that the disclosure of the
Settlement Agreement ought not to be allowed as such disclosure would be
prejudicial to the State Government. Whatever the merits of such a finding, the
High Court had no jurisdiction to interfere.
…
[26] It must then follow that in principle s. 11 of AA 2005 is designed to support
and facilitate the arbitral process and not to displace it. The approach, in the
context of s. 11, must be not to encroach on the procedural powers of the
arbitrators but to reinforce them … As stated by s. 11 itself, the relief sought
must be of an interim nature and, by implication, not permanent. It is plain that
the interim measures are not intended to displace the powers of the arbitrator.
They are certainly not there for the High Court to exert some supervisory
function over the arbitral process. In the circumstances, the learned Judge
ought to have declined to order discovery.
Therefore, interim measures should only be granted by the High Court, where such
measures will aid, facilitate or support the arbitral proceedings and not where they will
impede such proceedings.
Within this broad principle, the question arises as to what the applicant should do when
both the High Court and the arbitral tribunal are empowered to grant the same type of
interim measures under sections 11 and 19 of the Arbitration Act 2005.
Initially, the courts took the position that where the High Court and the arbitral tribunal’s
power to grant interim measures overlapped, a party should first apply to the arbitral
tribunal for such interim measures as can be seen from Jiwa Harmoni supra.
Subsequently, the High Court, in Cobrain Holdings supra, while recognizing that an
application for interim measures should first be made to the arbitral tribunal, where there
was an overlap between the powers of the High Court and the arbitral tribunal, allowed for
circumstances where an application may be made directly to the High Court. This would
include circumstances where third parties over whom the arbitral tribunal had no
jurisdiction were involved, where matters were very urgent or where the court’s coercive
powers were required.
The first of these circumstances, where a third party was involved, arose in Metrod supra,
and the High Court followed Cobrain Holdings supra and allowed the application to be
made directly to the High Court.
P 92
P 93
Thereafter, the High Court, in Interactive Brokers supra and Bumi Armada supra, appears to
have taken a broader position and allowed an application to be made to the High Court for
interim measures, even where the powers of the High Court and arbitral tribunal
overlapped, without apparently considering the circumstances outlined in Cobrain
Holdings supra.
The position should be that where there is an overlap between the powers of the High
Court and the arbitral tribunal under sections 11 and 19, an application for interim
measures should be made to the arbitral tribunal first. However, where there is a third
party involved, an emergency or a need for coercive powers, an application may be made
to the High Court immediately.

57
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Apart from this, as emphasized in IJM Construction supra, the High Court may reconsider an
application for interim relief after an order by an arbitral tribunal. However, based on
Obnet supra, the High Court’s reconsideration of any decision by the arbitral tribunal will
be limited, as the High Court will be bound by the findings of fact made by the arbitral
tribunal.

[E] Arbitral Proceedings to Be Commenced Within Reasonable Time

The arbitral proceedings should be commenced within a reasonable time and without
delay.
In this context, the High Court, in Bumi Armada supra at paragraph 47(e), held:
arbitral proceedings should be commenced within a reasonable time. Any
unreasonable delay in the commencement and/or conduct of arbitral
proceedings may:
(i) constitute an abuse of court process; and/or
(ii) oppress the party who is the subject matter of the interim relief.
The applicant for interim relief from court, should adduce affidavit evidence to
show reasons:
(1) why arbitral proceedings cannot be commenced within a reasonable time
and hence, the need to apply to court for interim relief under s. 11(1) AA; or
(2) if arbitral proceedings have already been instituted, why the applicant is
not able to apply for interim relief from the arbitral tribunal and needs to
apply to court for such relief.

§11.03 MERITS
Apart from these general principles, it is important to note that the courts will not decide
the merits of the dispute between the parties pursuant to an application for interim
measures under section 11(1) of the Arbitration Act 2005.
In this regard, the High Court, in Bumi Armada supra at paragraph 49, held:
… the court should not decide on the merits of the dispute which should be
decided solely by the arbitral tribunal as agreed by the parties in question … .
P 93
P 94

§11.04 BEFORE OR DURING ARBITRAL PROCEEDINGS

Section 11(1) of the Arbitration Act 2005 expressly provides that an application for interim
measures may be made to the High Court ‘before or during arbitral proceedings’.
Based on these express words, the High Court, in I-Expo Sdn Bhd v. TNB Engineering
Corporation Sdn Bhd [2007] 1 LNS 304 at page 4, Bumi Armada supra at paragraph 39 and
Fadzly Enterprise Sdn Bhd v. Small Medium Enterprise Development Bank Malaysia Berhad
[2017] 1 LNS 1305 at paragraph 22, has confirmed that an application for interim measure
may be made before the arbitral proceedings are commenced.
The High Court, in Itramas Technology Sdn Bhd v. AmBank (M) Berhad [2009] 1 LNS 923 at
paragraph 4 and Metrod supra at paragraph 18, also confirmed, based on these express
words of section 11(1), that an application to the High Court for interim measures may be
made after the arbitration proceedings have commenced, that is during the arbitral
proceedings.

§11.05 SPECIFIC PRINCIPLES

Apart from the general principles outlined above, specific principles will apply depending
on the type of interim measures sought under section 11(1). The Court of Appeal, in La Kaffa
International Co Ltd v. Loob Holding Sdn Bhd [2018] MLJU 703 at paragraph 29, held that
section 8 did not remove the inherent jurisdiction of the courts to grant interim measures,
although the courts would be slow to provide relief not expressly provided for in the Act.
The courts have adopted the usual principles that apply to each particular type of interim
measure sought. Each particular type of interim measure sought that has been considered
by the courts and the principles applied are outlined below.

[A] Maintain the Status Quo

The High Court, in Bungy Malaysia Sdn Bhd v. Menara Kuala Lumpur Sdn Bhd [2011] 3 CLJ 906
at paragraph 6.1.18, applied the general principles applicable in court for the grant of an
interim injunction, as set out by the Court of Appeal, in Keet Gerald Francis Noel John v.
Mohd Noor @ Harun Abdullah & Ors [1995] 1 MLJ 193 at pages 206 and 207, to an application
for an interim injunction under the former section 11(1)(h).
These principles are that a court hearing an application for an interim injunction should

58
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 consider:
(1) whether there are bona fide serious issues to be tried;
(2) where the justice of the case lies. The court should consider the harm that would be
caused if the injunction is granted against the harm that would be caused if it is
refused. The court should also consider the applicant’s financial position to meet his
undertaking as to damages in this context; and
P 94
P 95
(3) that the remedy is discretionary. As such, the court is entitled to take into account all
discretionary considerations, such as:
(a) any delay in making the application;
(b) any adequate alternative remedy, such as an award of monetary compensation;
and
(c) any question going to the public interest.
The Court of Appeal, in La Kaffa International supra at paragraphs 32, 35 and 36, applied
the general principles applicable to mandatory injunctions to section 11. These principles
are that:
(1) the applicant usually has an unusually strong and clear case against the respondent;
(2) damages will not be an adequate remedy to the applicant;
(3) the cost to the respondent to do work to prevent or lessen the likelihood of a future
apprehended wrong must be considered and balanced against the likely damage to
the applicant:
(a) where the respondent has acted unreasonably, the order may be granted even
if the cost incurred by the respondent as a result is greater than the damage
likely to be suffered by the applicant; and
(b) where the respondent has acted reasonably, but wrongfully, the cost likely to be
incurred by the respondent is important because:
(i) no legal wrong has accrued as yet; and
(ii) if heavy damages do occur, the applicant has his remedies in law.
(4) if an order is granted, the respondent must know exactly what he must do.
These principles are likely to continue to be applicable under the current section 11(1)(a).
The former section 11(1)(f) provided for a particular type of interim measure for the
preservation, interim custody or sale of any property which is the subject matter of the
dispute. The High Court, in Ikatan Innovasi Sdn Bhd v. KACC Construction Sdn Bhd [2008] 3
CLJ 48, strictly construed the former section 11(1)(f) of the Arbitration Act 2005 and held
that it would only apply to property, which is the subject matter of the arbitration. In this
regard, the High Court, in Ikatan Innovasi supra at paragraph 14, held:
Reading s. 11(1)(f) and (g) of the Arbitration Act 2005 quoted above, there is no
doubt that the High Court has the power to grant interim relief or measures to a
party partaking in an arbitration proceedings before or during the proceedings.
However para. (f) of the section seems to be restricted to preservation of the
property which is the subject matter of the dispute before the arbitration
proceedings. In this respect, the plaintiff’s disputes with the defendant which
the plaintiff is referring to the arbitration in this case do not involve any
property. The disputes are only related to liquidated sum in the form of
payment for works done under a contract. Thus para. (f) of s. 11(1) of the
Arbitration Act may not be applicable in this instant.
P 95
P 96
This strict construction of the former section 11(1)(f) is unlikely to limit the scope of the
current section 11(1)(a), as the present provision is broadly drafted and is not limited to
‘property which is the subject matter of the dispute’.

[B] Prevent Harm to the Arbitral Process

This provision makes it clear that the High Court may grant interim measures not only to
protect the parties but also to protect the arbitral process itself. The provision is not
limited to situations where harm would be caused to such process but includes situations
where harm is likely to be caused. This is because, at the time such interim measures are
sought, it may be difficult to prove the harm would actually be caused. (20) In practice, an
application may be made under this provision to restrain other arbitral or civil
proceedings that are likely to harm the arbitral process. (21)

[C] Preserve Assets

The High Court, in Bauer (Malaysia) Sdn Bhd v. Embassy Court Sdn Bhd [2009] 1 LNS 848 at
paragraphs 3(c) and (d), further explained the principles applicable to the former section
11(1)(e):

59
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (c) When dealing with Section 11(e) of AA 2005 courts need to look at the justice
of the case and the competing interest. Section 11(e) AA 2005 in my view is not a
provision which is enacted to give priority to a prospective creditor in
arbitration. It must be construed to be a restrictive provision to ensure that the
respondent is not disabled from conducting its day to day affairs in the ordinary
course of business. The learned author OP Malhotra in his book ‘The Law and
Practice of Arbitration and Conciliation 2006’ dealt with the related provision in
the Indian Act and says at page 395 as follows:-
This power, therefore, can be exercised only where an identified fund
is in dispute-as for example, it is alleged that the respondent is
trustee for the claimant in respect of a specific sum of money ie,
where the right of a party to a specific fund is in dispute in a
reference, the court has power to order the fund to be paid into court
or otherwise secured. But this power has to be exercised with
discretion. For instance, in Global Co v. National Fertilizer Ltd a single
judge of the New Delhi High Court declined to order the National
Fertilizers Ltd, a Government of India undertaking to furnish security
claimed by the petitioner on the vague ground of his financial
interest.
(d) In addition, I will say the power of the court to secure the amount in dispute
is a drastic power and that power as a general rule will only be used where
there is an identified fund in dispute and is not available to a party seeking to
recover damages in advance of the hearing before the arbitrator (see Mustill &
P 96 Boyd, The Law and Practice of Commercial Arbitration in England 2nd edition,
P 97 page 332; Ng Seng Kiok dan lain-lain v. Chooi Mun Sou dan lain-lain [1993] 2 CLJ
431; [1993] MLJU 279; Richo Ltd v. International Ford Co [1989] 1 ALL ER 613).
This was subsequently followed by the High Court, in Jiwa Harmoni supra at paragraph 2(d).
The need for an identified fund under the former section 11(1)(e) is unlikely to apply to the
current section 11(1)(c), which uses the broader words ‘preserving assets’ rather than
‘securing the amount in dispute’.
Apart from this, the High Court, in Bumi Armada supra at paragraph 58, held that the same
principles would apply to the former section 11(1)(g) of the Arbitration Act 2005, as to an
application for a Mareva injunction pending disposal of a suit and summarized these
principles as follows:
In deciding whether to grant a Mareva injunction under s. 11(1)(f), (g) and (h) AA
before or after during arbitral proceedings, I adopt the same following tests as
applied by cases in respect of Mareva injunctions pending disposal of suits:
(a) the plaintiff should have a ‘good arguable case’;
(b) the defendant has assets within this jurisdiction;
(c) there is a risk of dissipation of the defendant’s assets; and
(d) the balance of convenience should be in favour of granting the Mareva
injunction.
These principles were also applied by the High Court, in Ikatan Innovasi supra and
Interactive Brokers supra.
In addition, the High Court, in Ikatan Innovasi supra at paragraph 15, explained that the
former section 11(1)(g) covers both movable and immovable properties.
But para. (g) of the same section of the Act, in my opinion, is wider in scope. The
language of that paragraph suggests that the High Court may make such order as
the court thinks just and appropriate in the circumstances in order to ensure
the award that the applicant or plaintiff may obtain in the arbitration
proceedings is not just a hollow piece of paper and of no value, because there is
no assets that can be realized from the defendant in order to satisfy the award.
The paragraph also does not confine the order that can be made to either
movable or immovable assets. Thus, both types of asset may be restrained by
the High Court order.
These principles, which are well established, are likely to continue to apply to an
application for a Mareva injunction under the current section 11(1)(c).

[D] Preserve Evidence

This provision makes it clear that the High Court has the jurisdiction to grant an order
preserving evidence in relation to arbitral proceedings. This provision was considered
P 97 important by the Working Group on the 2006 Model Law, as the ‘preservation of evidence
P 98 was not necessarily dealt with to a sufficient extent by all domestic rules of civil
procedure’. (22) These principles are, however, well settled in Malaysia. The general
principles for the grant of such an application are that: (23)

60
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (1) there must be an extremely strong prima facie case;
(2) the damage, potential or actual, must be very serious to the applicant;
(3) there must be clear evidence that the respondent has in their possession
incriminating documents or things; and
(4) there is a real possibility that the respondent may destroy such material.

[E] Security for Costs

The High Court, in Jiwa Harmoni supra, confirmed that the same principles that apply in
court in relation to applications for security for costs will apply in relation to the former
section 11(1)(a) of the Arbitration Act 2005. The High Court, in Jiwa Harmoni supra at
paragraph 2(c), held:
The case laws relating to grounds when the court will order for security for costs
are well settled and will apply to any application for security for costs before
the arbitrator. As a general rule, a plaintiff ordinarily resident in Malaysia,
cannot be subject to an application for security for costs purely on the grounds
of impecuniosities. However, when the plaintiff is a corporate entity, section 351
of CA 1965 will apply. That does not mean security for costs will be granted as of
right. It is only a discretionary relief. Such discretion will not be ordinarily
exercised in favour of the applicant unless the justice of the case demands so …
.
These principles will continue to apply to the current section 11(1)(e), which allows for
security for costs to be granted in the same way as the former section 11(1)(a).

§11.06 APPLICATION TO INTERNATIONAL ARBITRATION WITH A SEAT

OUTSIDE MALAYSIA
Section 11(3) of the Arbitration Act 2005 was introduced by the Arbitration (Amendment)
Act 2011 to allow the High Court to grant interim measures in aid of international
arbitrations with a seat outside Malaysia.
This amendment reversed the effect of the judgment of the High Court, in Aras Jalinan Sdn
Bhd v. Tipco Asphalt Public Company Ltd & Ors [2008] 5 CLJ 654, which was affirmed by the
Court of Appeal. This judgment was to the effect that an interim injunction could not be
granted in aid of an international arbitration with a seat in Malaysia.
P 98 The change in the law brought about by section 11(3) was recognized by the High Court, in
P 99 Bumi Armada supra at paragraph 47(a), where it was held:
… Section 11(3) AA allows Malaysian courts to grant interim relief for
‘international arbitration, where the seat of arbitration is not in Malaysia’
(please see ss. 2(1) and 2(2)(a) AA for the meaning of ‘international arbitration’).
Section 11(3) AA has been introduced by the 2011 Amendment Act and empowers
Malaysian courts to give interim relief for a cause of action which arises outside
Malaysia … .
P 99

References
1) See Analytical Commentary, Article 7, commentary 1.
2) See Analytical Commentary, Article 7, commentary 2.
3) See Analytical Commentary, Article 7, commentary 4.
4) See Analytical Commentary, Article 7, commentary 5.
5) See Analytical Commentary, Article 7, commentary 3.
6) See Analytical Commentary, Article 7, commentary 7.
7) See Analytical Commentary, Article 7, commentary 8.
8) See Analytical Commentary, Article 7, commentary 8.
9) See Analytical Commentary, Article 8, commentary 1.
10) See Analytical Commentary, Article 5, commentary 5.
11) See Innotec Asia Pacific Sdn Bhd v. Innotec GmbH [2008] 8 CLJ 304.
12) See Analytical Commentary, Article 8, commentaries 3 and 4.
13) See the judgments prior to Renault supra, in Standard Chartered Bank Malaysia Bhd v.
City Properties Sdn Bhd & Anor [2008] 1 CLJ 496 at para. 23, HC; Sunway Damansara Sdn
Bhd v. Malaysia National Insurance Bhd & Anor [2008] 3 MLJ 872 at para. 18, which take
the same position. See also the judgment that follow Renault supra, in Thien Seng supra
at paras 53 and 54, HC.
14) See Standard Chartered supra, Sunway Damansara supra, Renault supra, AV Asia supra.
15) See Usahasama SPNB-LTAT Sdn Bhd v. Abi Construction Sdn Bhd [2016] MLJU 1596 at
paras 17 to 21, HC, where it was held that a claimant must comply with conditions
precedent to a reference to arbitration, including referring the dispute to an officer
named in the appendix.

61
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 16) See Analytical Commentary, Article 9, commentary 1.
17) See Analytical Commentary, Article 9, commentary 2.
18) See Analytical Commentary, Article 9, commentary 5.
19) See Bumi Armada supra at para 47(b).
20) See United Nations, General Assembly, Report of the Working Group on Arbitration on
the work of its 39th Session, 8 Dec. 2003, A/CN.9/545 at para 25.
21) See David D. Caron and Lee M Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at pp 518-519.
22) See Report of the Working Group on Arbitration A/CN.9/545 supra at para 27.
23) See generally Arthur Anderson & Co v. Interfood Sdn Bhd [2005] 6 MLJ 239, CA.

62
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 3: Composition of Arbitrators
Publication 12. Number of Arbitrators
Arbitration in Malaysia: A (1) The parties are free to determine the number of arbitrators.
Commentary on the
Malaysian Arbitration Act (2) Where the parties fail to determine the number of arbitrators, the arbitral tribunal shall
–
(a) in the case of an international arbitration, consist of three arbitrators; and
Jurisdiction (b) in the case of a domestic arbitration, consist of a single arbitrator.
Malaysia
§12.01 INTRODUCTION
Section 12 of the Arbitration Act 2005 provides for the number of arbitrators in situations
Bibliographic reference both where parties agree to the number and where they do not.
'Chapter 3: Composition of Section 12 of the Arbitration Act 2005 reflects Article 10 of the 1985 Model Law save that
Arbitrators', in Thayananthan section 12 provides for a single arbitrator in the case of domestic arbitration.
Baskaran , Arbitration in
Malaysia: A Commentary on This difference is because the Arbitration Act 2005 provides for both domestic and
the Malaysian Arbitration international arbitration under section 3, while the 1985 Model Law only provides for
Act, (© Kluwer Law international arbitration under Article 1(1).
International; Kluwer Law Article 10 of the 1985 Model Law is in turn based on Article 5 of the 1976 UNCITRAL
International 2019) pp. 101 - Arbitration Rules, which provides:
126
Article 5 – Number of arbitrators
If the parties have not previously agreed on the number of arbitrators (ie one or
three), and if within fifteen days after the receipt by the respondent of the
notice of arbitration the parties have not agreed that there shall be only one
arbitrator, three arbitrators shall be appointed.

P 101 The current 2013 UNCITRAL Arbitration Rules provide for more flexibility in Article 7. This
P 102 article provides for three arbitrators by default, unless a party has not objected to a
proposal by the other party that there be only a sole arbitrator and the appointing
authority determines this is appropriate. Article 7 of the 2010 UNCITRAL Arbitration Rules
provides:
Article 7 – Number of Arbitrators
1. If the parties have not previously agreed on the number of arbitrators, and
if within 30 days after the receipt by the respondent of the notice of
arbitration the parties have not agreed that there shall be only one
arbitrator, three arbitrators shall be appointed.
2. Notwithstanding paragraph 1, if no other parties have responded to a
party’s proposal to appoint a sole arbitrator within the time limit
provided for in paragraph 1 and the party or parties concerned have failed
to appoint a second arbitrator in accordance with articles 9 or 10, the
appointing authority may, at the request of a party, appoint a sole
arbitrator pursuant to the procedure provided for in article 8, paragraph 2
if it determines that, in view of the circumstances of the case, this is more
appropriate.
The 2013 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules.

§12.02 TWO-LEVEL SYSTEM

Section 12 of the Arbitration Act 2005 and Article 10 of the 1985 Model Law illustrate the
‘two-level system’, which is typical of the Arbitration Act 2005 and the 1985 Model Law that
it reflects. (1)
The ‘two-level system’ allows the parties to first agree on any issue and, second, in the
absence of an agreement, provides for a set of default provisions. These types of provisions
are found throughout the Arbitration Act 2005 and are usually prefaced by the words
‘unless otherwise agreed’.

§12.03 PARTY AUTONOMY

Section 12(1) of the Arbitration Act 2005 recognizes the parties’ right to agree on the
number of arbitrators. This freedom is given primacy and any number agreed upon
between the parties will be given effect to. This includes situations where parties have
agreed to an even number of arbitrators, which is not prohibited by the Arbitration Act
2005. However, it would be prudent to agree on an uneven number of arbitrators to avoid a
deadlock. (2)

63
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 It is also important to bear in mind that the parties’ freedom to agree on the number of
arbitrators under section 12(1) includes the freedom to allow a third party or a set of
arbitration rules to determine the number of arbitrators under sections 2(2)(b) and (c) of
the Arbitration Act 2005.
P 102 This issue arose in AV Asia Sdn Bhd v. Pengarah Kuala Lumpur Regional Centre for Arbitration
P 103 & Anor [2013] 10 CLJ 115, where it was argued that a single arbitrator should be
appointed, as it was a domestic arbitration under section 12(2) of the Arbitration Act 2005,
although the parties had agreed to the 2012 KLRCA Arbitration Rules under section 12(1)
that provided for three arbitrators. However, the High Court declined to determine this
issue on the grounds that it had no power to intervene under section 12 and left the issue
to be determined by the arbitral tribunal under section 18 of the Arbitration Act 2005.

§12.04 THREE ARBITRATORS OR A SINGLE ARBITRATOR

In the absence of agreement, section 12(2) of the Arbitration Act 2005 provides that three
arbitrators shall be appointed for an international arbitration and a single arbitrator for
domestic arbitration.
The terms ‘international arbitration’ and ‘domestic arbitration’ are defined in section 2(1)
of the Arbitration Act 2005 and reference should be made to §2.10 supra in this regard.
The provision on international arbitration in section 12(2)(a) of the Arbitration Act 2005
reflects Article 10(2) of the 1985 Model Law. Three arbitrators were chosen as the default by
the 1985 Model Law, as it is the most common number in international arbitration. Single
arbitrators are also common for less complex matters to save time and costs. However, it
was felt that if the parties wanted a single arbitrator for these reasons, they would have
expressly provided for this, with the default provision serving as an added inducement. (3)
A single arbitrator is provided for in the case of domestic arbitration, probably because
this is again the most accepted number for domestic arbitration in Malaysia.
For example, the standard forms of building contracts published by the PWD and the
Malaysian Institute of Architects both provide for a single arbitrator.
P 103
P 104

13. Appointment of Arbitrators

(1) Unless otherwise agreed by the parties, no person shall be precluded by reason of
nationality from acting as an arbitrator.
(2) The parties are free to agree on a procedure for appointing the arbitrator or the
presiding arbitrator.
(3) Where the parties fail to agree on the procedure referred to in subsection (2), and the
arbitration consists of three arbitrators, each party shall appoint one arbitrator, and
the two appointed arbitrators shall appoint the third arbitrator as the presiding
arbitrator.
(4) Where subsection (3) applies and –
(a) a party fails to appoint an arbitrator within thirty days of receipt of a request in
writing to do so from the other party; or
(b) the two arbitrators fail to agree on the third arbitrator within thirty days of their
appointment or such extended period as the parties may agree,
either party may apply to the Director of the Asian International Arbitration Centre
(Malaysia) for such appointment.
(5) Where in an arbitration with a single arbitrator –
(a) the parties fail to agree on the procedure referred to in subsection (2); and
(b) the parties fail to agree on the arbitrator,
either party may apply to the Director of the Asian International Arbitration Centre
(Malaysia) for the appointment of an arbitrator.
(6) Where, the parties have agreed on the procedure for appointment of the arbitrator –
(a) a party fails to act as required under such procedure;
(b) the parties, or two arbitrators, are unable to reach an agreement under such
procedure; or
(c) a third party, including an institution, fails to perform any function entrusted to it
under such procedure,
any party may request the Director of the Asian International Arbitration Centre
(Malaysia) to take the necessary measures, unless the agreement on the
appointment procedure provides other means for securing the appointment.
(7) Where the Director of the Asian International Arbitration Centre (Malaysia) is unable to
act or fails to act under subsections (4), (5) and (6) within thirty days from the request,
any party may apply to the High Court for such appointment.
(8) In appointing an arbitrator the Director of the Asian International Arbitration Centre
(Malaysia) or the High Court, as the case may be, shall have due regard to –

64
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (a) any qualifications required of the arbitrator by the agreement of the parties;
(b) other considerations that are likely to secure the appointment of an independent
and impartial arbitrator; and
(c) in the case of an international arbitration, the advisability of appointing an
arbitrator of a nationality other than those of the parties.
P 104
P 105
(9) No appeal shall lie against any decision of the Director of the Asian International
Arbitration Centre (Malaysia) or the High Court under this section.

§13.01 INTRODUCTION
Section 13 of the Arbitration Act 2005 provides for the appointment of the arbitral tribunal,
either in the manner agreed upon by the parties or, in the absence of an agreement, in
accordance with the provisions of the Act. In this way, section 13 continues the ‘two-level
system’ found in section 12, where the parties are given the freedom to agree, but if there
is no agreement, the provisions of the Arbitration Act 2005 apply.
Section 13 of the Arbitration Act 2005 largely reflects Article 11 of the 1985 Model Law save
for some alterations in drafting and three significant changes:
(1) the words ‘subject to the provisions of paragraphs (4) and (5) of this article’ found in
Article 11(2) of the 1985 Model Law were not included in section 13(2) of the
Arbitration Act 2005. These words in Article 11(2) are intended to show that Articles
11(4) and (5) of the 1985 Model Law are mandatory. (4)
Sections 13(6), (8) and (9) of the Arbitration Act 2005 are the equivalent of Articles
11(4) and (5) of the 1985 Model Law. It is submitted that section 13(6), and its
equivalent Article 11(4), despite Article 11(2), is not mandatory. This is because both
section 13(6) and Article 11(4) provide that ‘unless the agreement on the appointment
procedure provides other means of securing the appointment’ and to that extent is
not mandatory and is still subject to agreement between the parties.
Sections 13(8) and (9) like Article 11(5) provide for matters to be considered by the
appointing authority and that the decision of the appointing authority may not be
appealed against. These provisions, save for section 13(8)(c), would appear to be
mandatory even in the absence of words to this effect in section 13(2);
(2) ‘the court or other authority’ referred to in Article 11 of the 1985 Model Law is
specified as the Director of the AIAC in section 13 of the Arbitration Act 2005. Section
13(7) of the Arbitration Act 2005 provides that, if the Director of the AIAC does not act
within thirty days, any party may apply to the High Court. There is no equivalent
provision to section 13(7) in the 1985 Model Law. This additional provision is
necessary in the Arbitration Act 2005 as the appointing authority is the head of an
arbitral institution rather than the courts; and
P 105
P 106
(3) section 13(8)(c) of the Arbitration Act 2005 omits the words ‘in the case of a sole or
third arbitrator’ found in Article 11(5) of the 1985 Model Law. It is submitted that these
words should not have been omitted, as the need for an arbitrator of a nationality
other than the parties in international arbitration only arises in the context of a sole
or presiding arbitrator. The two party-appointed arbitrators are not required to be of
a nationality other than the party appointing them, and, in practice, frequently a
party-appointed arbitrator will be of the same nationality as the party who
appointed him.

§13.02 NO RESTRICTION ON NATIONALITY

Section 13(1) of the Arbitration Act 2005, like Article 11(1) of the 1985 Model Law, prohibits
any person being prevented from acting as an arbitrator on the grounds of nationality. This
provision was included in the 1985 Model Law because some national laws precluded
foreigners from acting as arbitrators even in international cases. (5)
There are no provisions under the laws of Malaysia that preclude foreigners from acting as
arbitrators. Therefore, section 13(1) of the Arbitration Act 2005 gives statutory force to the
existing position.
However, it must be borne in mind that section 13(1) of the Arbitration Act 2005, like Article
11(1) of the 1985 Model Law, is a derogable provision, meaning that the parties may agree
otherwise. In this context, parties do agree in international matters that a single arbitrator
or the presiding arbitrator, in the case of an arbitral tribunal comprising three arbitrators,
will be of a nationality other than the nationality of the two parties.

§13.03 PARTY AUTONOMY

Section 13(2) of the Arbitration Act 2005, like Article 11(2) of the 1985 Model Law, recognizes
the parties’ freedom to agree on the procedure for the appointment of an arbitral tribunal.
This freedom should be interpreted broadly as including the right to agree that these
matters be decided by a third party or in accordance with arbitration rules pursuant to
sections 2(2)(b) and (c) of the Arbitration Act 2005. (6)

65
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Although the words ‘subject to the provisions of paragraphs (4) and (5) of this article’ found
in Article 11(2) are not found in section 13, as submitted in §13.01 supra, the effect of section
13 as a whole is the same. To that extent, the freedom granted to the parties under section
13(2) is to some extent limited by sections 13(6), (8) and (9).
Section 13(2) is the first step in the ‘two-level system’ mentioned earlier. If the parties have
failed to agree on a procedure for the appointment of arbitrators, then the procedure in
sections 13(3)-(5) will apply.
P 106
P 107

§13.04 DEFAULT PROCEDURE

Sections 13(3)-(5) of the Arbitration Act 2005, which reflect Article 11(3) of the 1985 Model
Law, are the second step in the ‘two-level system’ and provide for the default provisions
that apply when the parties have not agreed on the procedure for the appointment of
arbitrators.
Sections 13(3) and (4) provide for a situation where an arbitral tribunal of three arbitrators
is to be appointed. Section 13(3) provides that each party will appoint an arbitrator and
the two arbitrators will then appoint a third arbitrator. Section 13(4) further provides that
where the procedure set out in section 13(3) breaks down due to a party not appointing an
arbitrator within thirty days of being requested to do so by the other party or the two
arbitrators not appointing a presiding arbitrator within thirty days, then either party may
apply to the Director of the AIAC to appoint an arbitrator.
Section 13(5) provides for a situation where a sole arbitrator is to be appointed. Here,
either party may apply to the Director of the AIAC to appoint an arbitrator if the parties are
unable to agree on an arbitrator. Unlike section 13(4), a time limit of thirty days is not
given for the parties to agree on the appointment of a sole arbitrator. The absence of a
time limit was acceptable in this case since the persons expected to agree are the parties
and their inability to agree would become apparent from the application to the Director of
the AIAC for the appointment of an arbitrator. (7)
Sections 13(3)-(5) of the Arbitration Act 2005, like Article 11(3) of the 1985 Model Law, only
provide the default procedure for the appointment of a sole arbitrator and an arbitral
tribunal of three arbitrators, as these numbers are the most common in international
commercial arbitration. (8)
The Arbitration Act 2005 does not provide a default procedure for the appointment of an
arbitral tribunal comprised of two, four or more arbitrators, as it was thought to be
undesirable to list out the default procedure for an unlimited number of arbitrators. (9)
The Court of Appeal, in Sebiro Holdings Sdn Bhd v. Bhag Singh & Anor [2015] 4 CLJ 209 at
paragraph 13, recognized the importance of sections 13(3)-(5) in breaking any deadlock
between the parties and ensuring the arbitral tribunal was constituted:
It bears reiterating that though arbitration is intended for a voluntary process,
once a dispute has arisen, even parties acting bona fide find it difficult to
agree, ex post facto. Parties may attempt to obstruct the appointment to delay
the arbitration. This can frustrate the agreement. In our view, sub-ss. 13(3) and
(5) of Act 646 are a means of breaking deadlock that render the agreement
inoperable … .
The High Court, in Pendaftar Pertubuhan Malaysia v. Establishmen Tribunal Timbangtara
Malaysia & Ors [2011] 6 CLJ 684 at paragraph 26, emphasized that before these default
provisions could operate there must first be an arbitration agreement between the parties.
P 107
P 108
The High Court, in Majlis Ugama Islam dan Adat Resam Melayu Pahang v. Far East Holdings
Bhd & Anor [2007] 10 CLJ 318 at paragraph 22, decided that, when a court granted a stay, the
court may also refer the dispute to the Director of the KLRCA for the appointment of an
arbitrator under these default provisions:
The parties in this case cannot agree on a common arbitrator. Section 13 is thus
invoked and the court by its power under s. 10(2) made an order referring the
dispute to the D-KLRCA for an appointment of an arbitrator as provided for
under s. 13(5) of the 2005 Act. Though s. 13(5) states that parties may apply to the
D-KLRCA for the appointment of an arbitrator, this court feels that the fact this
court itself makes the order to refer to D-KLRCA, is in itself within its power
under s. 10(2) to make such consequential order or condition as it deems fit and
to reflect and give spirit to the intention of s. 13 of the Act.

§13.05 ASSISTANCE WITH AGREED PROCEDURE

Section 13(6) of the Arbitration Act 2005, which resembles Article 11(4) of the 1985 Model
Law, provides for assistance where the agreed procedure between the parties for the
appointment of an arbitral tribunal has broken down. Section 13(6) envisages three
situations where the agreed procedure may break down; all these situations deal with

66
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 circumstances where a person has failed to act as he should under the agreed procedure.
The first scenario is where a party has failed to act, the second is where the parties or two
arbitrators have failed to agree and the third is where a third party, usually the arbitral
institution, has failed to act.
In all three situations, a party may apply to the Director of the AIAC to take the necessary
measures unless the agreement on procedure provides for such a scenario.
Section 13(6) does not expressly provide for the type of measures to be taken by the
Director of the AIAC. It is unclear whether the Director should take the step which the
person had failed to take under one of the three scenarios in section 13(6) or should
directly appoint an arbitrator even if there is some preliminary step that has yet to be
taken by a person.
For example, an arbitration agreement provides that Party A shall nominate three
arbitrators, from which, Party B may select two arbitrators from the three nominated, and
Party A may then appoint one of these two arbitrators as the sole arbitrator. If Party B does
not select two arbitrators from the three nominated by Party A, it is unclear whether the
Director of the AIAC should select two arbitrators from the three proposed by Party B or
directly appoint a sole arbitrator. This question is of significance, as it may amount to
grounds for setting aside an award under section 37(1)(a)(vi) of the Arbitration Act 2005.
The purpose of section 13(6) of the Arbitration Act 2005 is to prevent undue delay or a
deadlock by means of assistance from the Director of the AIAC. Given the purpose of this
provision, it is submitted that the Director should directly proceed to appoint the arbitral
tribunal in the event of a breakdown in the procedure.
P 108 Section 13(6) allows for assistance by the Director of the AIAC unless the agreement on
P 109 procedure provides other means. The reference to an agreement on procedure should
be given a liberal meaning to include any agreement for the deadlock to be resolved by a
third party or arbitration rules pursuant to sections 2(2)(b) and (c) of the Arbitration Act
2005. There is, of course, the scenario where the third party, who is usually the arbitral
institution, itself fails to act, in which case a party may also seek assistance from the
Director of the AIAC.

§13.06 DIRECTOR’S FAILURE TO ACT

Section 13(7) provides that if the Director does not act within thirty days, a party may apply
to the High Court for the appointment of an arbitrator. Section 13(7) of the Arbitration Act
2005 does not have an equivalent provision in the 1985 Model Law.
Section 13(7) is included in the Arbitration Act 2005 because an arbitral institution rather
than the courts is designated as the default appointing authority. While this carries with it
the advantage of speed, convenience and reduced costs, there is a risk that the arbitral
institution itself may not act. As such, there is a need for a default provision allowing
parties to apply to the High Court in the event the Director of the AIAC does not act.

§13.07 GUIDELINES FOR APPOINTMENT

Section 13(8) of the Arbitration Act 2005, which reflects Article 11(5) of the 1985 Model Law,
provides guidelines for the appointment of arbitrators to the Director of the AIAC and the
High Court.
It is submitted that the first two guidelines are binding as they flow from the arbitration
agreement or the need for an independent and impartial arbitrator under section 12 of the
Arbitration Act 2005. (10)
The third guideline in section 13(8)(c) should be viewed in the light of section 13(1) of the
Arbitration Act 2005. While there is a prohibition against restricting persons on the grounds
of nationality from acting as arbitrators, it is recognized that in international arbitration it
may be advisable to have an arbitrator of a nationality other than the parties. As
mentioned in §13.01 supra, it is unfortunate that the words ‘in the case of a sole or third
arbitrator’ in Article 11(5) of the 1985 Model Law were omitted from section 13(8)(c) of the
Arbitration Act 2005, as the need for an arbitrator of a nationality other than that of the
parties only arises in the context of a sole or third arbitrator in international arbitration.
It is submitted that the third guideline is discretionary and not mandatory, as is implicit
from the use of the word ‘advisability’. As such, the parties may stipulate otherwise in their
agreement with respect to the nationality of the arbitrators.
The Court of Appeal, in Sebiro Holdings Sdn Bhd v. Bhag Singh & Anor [2015] 4 CLJ 209,
clarified that the Director of the AIAC’s powers under section 13(8) of the Arbitration Act
P 109 2005 are administrative powers and not judicial. The Director is accordingly not required to
P 110 allow the parties a chance to be heard or to consider any jurisdictional issue. The Court
of Appeal, in Sebiro Holdings supra at paragraph 17, held:
It should be noted that the power exercised by the Director of the KLRCA under
sub-ss. 13(4) and (5) of Act 646 is an administrative power. The Director of the
KLCRA is not required to determine the question of the validity of the
arbitration agreement, the maintainability and arbitrability of the claim and

67
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 other jurisdictional matters. The subsections merely provide for the Director of
the KLRCA to appoint arbitrator(s) in the event the parties fail to agree on the
arbitration. The director’s function is not a judicial function where he has to
afford the right to be heard to the parties before an arbitrator(s) is appointed.

§13.08 NO APPEAL
Section 13(9) of the Arbitration Act 2005, which reflects Article 11(5) of the 1985 Model Law,
provides that no appeal shall lie against any decision by the Director of the AIAC or the
High Court on the appointment of an arbitrator.
This provision is appropriate for two reasons. First, as explained in Sebiro Holdings supra,
the decision on the appointment of an arbitrator is an administrative matter. Second,
there is the need for the arbitral tribunal to be constituted as soon as possible without
delays caused by appeals. (11)
P 110
P 111

14. Grounds for Challenge

(1) A person who is approached in connection with that person’s possible appointment as
an arbitrator shall disclose any circumstances likely to give rise to justifiable doubts as
to that person’s impartiality or independence.
(2) An arbitrator shall, without delay, from the time of appointment and throughout the
arbitral proceedings, disclose any circumstances referred to in subsection (1) to the
parties unless the parties have already been informed of such circumstances by the
arbitrator.
(3) An arbitrator may be challenged only if –
(a) the circumstances give rise to justifiable doubts as to that arbitrator’s impartiality
or independence; or
(b) that arbitrator does not possess qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by that party, or in whose appointment
that party has participated, only for reasons which that party becomes aware of after
the appointment has been made.

§14.01 INTRODUCTION
Section 14 of the Arbitration Act 2005 sets out the grounds for challenging an arbitrator.
There are three grounds, which are lack of impartiality, independence or qualifications.
Section 14 of the Arbitration Act 2005 reflects Article 12 of the 1985 Model Law. In
particular, sections 14(1) and (2) reflect Article 12(1) and sections 14(3) and (4) reflect Article
12(3) and (4).
Article 12 of the 1985 Model Law in turn reflects Articles 9 and 10 of the 1976 UNCITRAL
Arbitration Rules. Article 12(1) of the 1985 Model Law reflects Article 9 of the 1976 UNCITRAL
Arbitration Rules, while Article 12(2) of the 1985 Model Law reflects Article 10 of the 1976
UNCITRAL Arbitration Rules.

§14.02 DISCLOSURE
Unlike a judge, most arbitrators continue to practise in their chosen professions. This can
give rise to conflicts of interest. Sections 14(1) and (2) of the Arbitration Act 2005 provide
for this by requiring an arbitrator to disclose any circumstances likely to give rise to
justifiable doubts as to his impartiality or independence. This obligation to disclose is
broader than may be assumed on two counts.
First, the obligation to disclose is not limited to the parties. The arbitrator is also obliged
to make disclosure to the arbitral institution that approaches him for an appointment. (12)
Furthermore, an arbitrator is also required to make disclosure to his co-arbitrators in the
case of an arbitral tribunal comprising two or more arbitrators. (13)
P 111
P 112
Second, the obligation to disclose is not limited to the time of appointment. Instead, as
expressly provided under section 14(2) of the Arbitration Act 2005, this is a continuing duty.
This continuing obligation is important because circumstances change. Therefore, an
arbitrator who was not initially conflicted may later become potentially conflicted, due to,
for example, a new business affiliation or acquisition of shares. (14)
The obligation to disclose covers not only the present and the future but also the past. This
was emphasized by the High Court in Sundra Rajoo supra, where the party-appointed
arbitrator was required to disclose prior appointments by the same party. However, as
decided by the High Court, in MMC Engineering Group Bhd & Anor v. Wayss & Freytag (M)
Sdn Bhd & Anor [2015] MLJU 477, this obligation may not extend to making disclosure of
allegations, even of a criminal nature, made against an arbitrator in a prior unrelated
arbitration.

68
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 §14.03 GROUNDS
Section 14(3) of the Arbitration Act 2005 provides that the only grounds for challenging an
arbitrator are a lack of impartiality, independence or qualifications. It is important to note
that these are the ‘only’ grounds for challenge provided by the Arbitration Act 2005. The
use of the word ‘only’ indicates that these grounds are exhaustive. (15)
Instead of listing out specific grounds for challenge, the Arbitration Act 2005 has adopted a
broad test in section 14(3)(a). The words ‘impartiality’ and ‘independence’ have distinct
but overlapping meanings.
‘Impartiality’ is the autonym of bias. And, bias is a predisposition to decide in favour of
one party without proper regard to the merits of the dispute. (16) The test is a ‘real danger
of bias’ and only a possibility needs to be shown, not a probability. (17) ‘Independence’ is
the absence of any relationship between the parties, a party or the dispute. (18)
The High Court, in Sundra Rajoo supra at paragraph 10(b), has emphasized that a party-
appointed arbitrator in an arbitral tribunal comprised of three arbitrators is required to
be impartial and independent:
It must be noted that: (i) the requirement of impartiality is a principle of
natural justice; (ii) it is a fundamental principle that an arbitrator must remain
independent and impartial; (iii) where an arbitral tribunal contains party-
nominated arbitrators, the presumption remains that, even if nominated by one
of the parties, the arbitrator will be independent and impartial; (iv) a party-
nominated arbitrator is usually appointed in international arbitrations by
P 112 reason of culture or background, to be broadly sympathetic with the case to be
P 113 put forward, but who will be strictly impartial when it comes to assessing the
facts and evaluating the arguments on fact and law; (v) a party may nominate an
arbitrator who is generally predisposed towards it personally, or as regards to
its position in the dispute, provided that the person concerned is at the same
time capable of impartial and judicial application to the evidence and
arguments submitted by both parties.
A variety of situations have been considered by the courts in determining whether an
arbitrator lacks impartiality or independence.
As stated above, the High Court, in Sundra Rajoo supra, emphasized that a party-
nominated arbitrator must be impartial and independent. In this regard, the High Court, in
Sundra Rajoo supra at paragraph 10(h), specifically held that if an arbitrator did not
disclose all his other appointments by the party who appointed him within a given period
of time, the arbitrator would be removed.
This reflects the general perception that the frequent appointment of an arbitrator by a
party may give rise to partiality towards that party. However, in a commodities arbitration,
like the palm oil arbitration in Sundra Rajoo supra, it is not uncommon for a party to
repeatedly appoint the same arbitrator due to the small specialized pool of arbitrators.
(19)
The High Court, in Tan Sri Dato’ Professor Dr Lim Kok Wing v. Thurai Das a/l Thuraisingham &
Anor [2011] 1 LNS 717, considered a situation where the same arbitrator had been
appointed in two arbitrations arising from a building project. The first arbitration was
between the contractor and the employer, while the second arbitration was between the
architect and the employer. The employer challenged the arbitrator in the first arbitration
on the grounds that the arbitrator would be influenced by events in the second arbitration.
The High Court, in Tan Sri Dato’ Professor Dr Lim Kok Wing supra at page 17, decided that it
was ‘most improbable’ that the arbitrator would be so influenced and dismissed the
challenge.
The High Court, in Sabah Medical Centre supra, decided that statements made by an
arbitrator in an interim award that appeared to determine issues that had yet to be heard
did give rise to justifiable doubts as to his impartiality. In this regard, the High Court, in
Sabah Medical Centre supra at paragraph 13, held:
In his interim award the arbitrator assures that he has not made up his mind on
issues relating to the set-off claims. This is cold comfort to SMC because by
having those negative thoughts at the back of his mind, there is a real
possibility that the arbitrator has prefixed his conclusions on the bona fides of
SMC’s claims. Such negative predisposition will be difficult to displace and SMC
should not be put through a hearing which appears to be predetermined. It
strikes at the very heart of the rule that no person shall be condemned unless
given the opportunity of being heard: Ridge v. Baldwin [1964] AC 40. In
Metramac, supra, the Federal Court held that language by a judge suggesting
that careful consideration has been given does not preclude scrutiny of the
judgment for bias.

P 113 The High Court, in MMC Engineering supra, considered a situation where a party-appointed
P 114 arbitrator in an arbitral tribunal of three arbitrators had been charged with bribery in
relation to an earlier unrelated arbitration. There were pending civil and criminal

69
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 proceedings arising from these allegations of bribery. Apart from this, it was also alleged
that the arbitrator had used submissions, delivered by a party in the present arbitration,
to prepare submissions for use in the earlier arbitration to assist the party who bribed him.
The High Court, in MMC Engineering supra at paragraph 172, held that these allegations did
not give rise to justifiable doubts as to impartiality as there was a failure to establish a
causal link between the earlier arbitration and the present arbitration:
As was the case with the character ground, matters concerning the arbitrator’s
impartiality and independence must be determined by reference to the parties
and issues in or to a particular arbitration. It is not enough if not unsafe, to
accuse an arbitrator of bias, that he lacks impartiality or independence in one
arbitration proceeding as a basis for alleging bias and the like against that
arbitrator in another arbitration proceeding. This is regardless the seriousness
of the allegation in the first arbitration proceeding. I would venture to say that
to accept such an allegation is extremely far-reaching; not to mention that it
violates the basic tenets of fairness and justice to the arbitrator accused of such
lapses to find against him by way of setting aside the seeds of his work; without
more.
Based on these authorities, there is an emphasis placed on the facts directly related to the
arbitration. Where the challenge arises from facts directly related to the arbitration, like
the arbitrator’s failure to disclose prior appointments by a party in Sundra Rajoo supra and
the intemperate interim award in Sabah Medical Centre supra, the courts are more likely to
uphold the challenge. However, where the facts are not directly related to the arbitration,
like the other arbitrations in Tan Sri Dato’ Dr Lim Kok Wing supra and MMC Engineering
supra, it appears that the courts are reluctant to allow the challenge.
Apart from impartiality and independence, an arbitrator may also be challenged if he
does not have ‘qualifications agreed to by the parties’. It is essential that these
qualifications have been agreed upon by the parties, usually in the arbitration agreement.
If the parties have agreed that an arbitrator should have certain qualifications, either
party may challenge the arbitrator if he does not possess such qualifications. However,
where there is no such agreement, a party cannot later insist on particular qualifications
and challenge an arbitrator for lacking such qualifications. This was recognized by the
Court of Appeal, in Sebiro Holdings Sdn Bhd v. Bhag Singh & Anor [2015] 4 CLJ 209 at
paragraphs 18-21.

§14.04 ESTOPPEL
Section 14(4) of the Arbitration Act 2005 gives statutory force to the rules of estoppel in the
context of the appointment of an arbitrator. A party is estopped from challenging an
arbitrator, who he appointed or participated in appointing, on the grounds the party
already knew of before the appointment.
P 114
P 115
In this regard, the word ‘participated’ used in section 14(4) should be construed broadly to
include situations where the party has been involved in the process of appointment of the
arbitrator, for example, the list-procedure under Article 6(3) of the 1976 UNCITRAL
Arbitration Rules. (20)
P 115
P 116

15. Challenge Procedure

(1) Unless otherwise agreed by the parties, any party who intends to challenge an
arbitrator shall, within fifteen days after becoming aware of the constitution of the
arbitral tribunal or of any reasons referred to in subsection 14(3), send a written
statement of the reasons for the challenge to the arbitral tribunal.
(2) Unless the challenged arbitrator withdraws from office or the other party agrees to the
challenge, the arbitral tribunal shall make a decision on the challenge.
(3) Where a challenge is not successful, the challenging party may, within thirty days after
having received notice of the decision rejecting the challenge, apply to the High Court
to make a decision on the challenge.
(4) While such an application is pending, the arbitral tribunal, including the challenged
arbitrator, may continue the arbitral proceedings and make an award.
(5) No appeal shall lie against the decision of the High Court under subsection (3).

§15.01 INTRODUCTION
Section 15 of the Arbitration Act 2005 provides the procedure for challenging an arbitrator,
where the parties have not agreed on such a procedure. Sections 15(1) and (2) of the
Arbitration Act 2005 reflect Article 13(2) of the 1985 Model Law, while sections 15(3)-(5)
reflect Article 13(3). Section 15 of the Arbitration Act 2005 and Article 13 of the 1985 Model
Law differ in the following aspects:
(1) Article 13(1) of the 1985 Model Law is not included in the Arbitration Act

70
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 2005. Article 13(1) provides:
The parties are free to agree on procedure for challenging an
arbitrator, subject to the provisions of paragraph (3) of this article.
(2) the opening words of Article 13(3) of the 1985 Model Law, i.e. ‘if challenge
under any procedure agreed upon by the parties or under the procedure
of paragraph (2) of this article …’, are not included in the corresponding
section 15(3) of the Arbitration Act 2005.
These provisions in Article 13 of the 1985 Model Law that have been omitted from section 15
of the Arbitration Act 2005 make it clear that the parties are free to agree on the procedure
for challenge to an arbitrator subject to the ultimate decision on a challenge being made
by the court.
By omitting these provisions from section 15 of the Arbitration Act 2005, it is less clear
whether this position applies in Malaysia. From the opening words of section 15(1) of the
Arbitration Act 2005, it appears clear that the parties are free to agree on the procedure.
However, it is unclear whether sections 15(3)-(5) are mandatory.
P 116
P 117

§15.02 DEFAULT PROCEDURE

Sections 15(1) and (2) of the Arbitration Act 2005 follow the usual ‘two-level system’. The
parties are free to agree on the procedure for challenge, failing which the default
procedure applies.
Under the default procedure, a party must submit a written statement of the grounds of
challenge within fifteen days of the constitution of the arbitral tribunal or of the party
becoming aware of the grounds.
Thereafter, the arbitral tribunal must make a decision on the challenge, unless the
challenged arbitrator withdraws or the other party agrees with the challenge.
Where the arbitral tribunal comprises three arbitrators, they would all need to make a
decision on the challenge. A challenge is not a question of procedure that can be decided
by the presiding arbitrator alone under section 31(2) of the Arbitration Act 2005. (21)
In the case of a sole arbitrator, it is unclear whether a formal decision is required, as
requiring such a decision would be of little ‘practical relevance’. (22)
It has been suggested that in the case of a sole arbitrator, the decision not to withdraw
itself amounts to a decision on the challenge, allowing a party to apply to the High Court
under section 15(3). (23)

§15.03 APPLICATION TO HIGH COURT

Section 15(3) of the Arbitration Act 2005 allows a challenging party that was unsuccessful to
apply to the High Court for a decision.
The High Court, in Tan Sri Dato’ Professor Dr Lim Kok Wing v. Thurai Das a/l Thuraisingham &
Anor [2011] 1 LNS 717 at pages 13 and 14, emphasized that the procedure set out in sections
15(1) and (2) must first be complied with before any application may be made to the High
Court under section 15(3).
This approach of the High Court is consistent with section 8 of the Arbitration Act 2005 and
the policy of minimalist intervention envisaged by that section. In accordance with this
policy, the arbitral tribunal must be allowed to decide matters first before they are raised
before the courts.

§15.04 PREVENTING DILATORY TACTICS

As stated above, sections 15(3)-(5) of the Arbitration Act 2005 reflect Article 13(3) of the 1985
Model Law. Article 13(3) was a compromise between two divergent views. One of the views
was that no appeal should lie against the arbitral tribunal’s decision on the challenge, with
any dissatisfaction being taken up later in an application to set aside the final award. This
P 117 was to prevent dilatory tactics but would have had the unfortunate result of leaving a
P 118
challenged arbitrator on the tribunal until the final award. The other view was that an
appeal against any decision of the arbitral tribunal on a challenge could be made
immediately with the proceedings suspended pending a decision by the courts on the
challenge. This would however result in deliberate dilatory tactics. (24)
As a compromise, section 15(3) allows for an immediate appeal to the High Court but puts
in place these safeguards against dilatory tactics: (25)
(1) first, an application to the High Court must be made within thirty days under section
15(3);
(2) second, the arbitral tribunal may continue the proceedings and even make an award,
despite an application in the High Court pending under section 15(4); and
(3) third, no appeal lies against any decision of the High Court in this regard under
P 118
section 15(5).

71
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 118
P 119

16. Failure or Impossibility to Act

(1) Where an arbitrator becomes in law or in fact unable to perform the functions of that
office, or for other reasons fails to act without undue delay, that arbitrator’s mandate
terminates on withdrawal from office or if the parties agree on the termination.
(2) Where any party disagrees on the termination of the mandate of the arbitrator, any
party may apply to the High Court to decide on such termination and no appeal shall lie
against the decision of the High Court.
(3) Where, under this section or subsection 15(2), an arbitrator withdraws from office or a
party agrees to the termination of the mandate of an arbitrator, it shall not imply
acceptance of the validity of any ground referred to in this section or subsection 14(3).

§16.01 INTRODUCTION
Section 16 of the Arbitration Act 2005 deals with an arbitrator’s inability to perform his
function and the steps that can be taken as a result of such a disability.
Section 16 of the Arbitration Act 2005 reflects Article 14 of the 1985 Model Law with minor
differences in drafting. Sections 16(1) and (2) of the Arbitration Act 2005 are based on
Article 14(1) of the 1985 Model Law, and section 16(3) is based on Article 14(2).
Article 14 of the 1985 Model Law is in turn based on Article 13(2) of the 1976 UNCITRAL
Arbitration Rules, which provides:
In the event that an arbitrator fails to act or in the event of the de jure or de
facto impossibility of his performing his functions, the procedure in respect of
the challenge and replacement of an arbitrator as provided in the preceding
articles shall apply.
A similar provision is found in Article 12(3) of the 2013 UNCITRAL Arbitration Rules, which
forms part of the 2018 AIAC Arbitration Rules.

§16.02 INABILITY AND DELAY

Section 16(1) of the Arbitration Act 2005 provides three situations, where an arbitrator’s
mandate may terminate by either his withdrawal or the parties’ agreement:
(1) where the arbitrator becomes in law unable to perform the functions of his office;
(2) where the arbitrator becomes in fact unable to perform the functions of his office; or
(3) where the arbitrator for other reasons fails to act without undue delay.
P 119
P 120
We will consider each of these three situations below.
First, an arbitrator will be unable to perform his function in law if he is declared bankrupt
or convicted of crime. Second, an arbitrator will be unable to perform his functions in fact
due to death or disability. In practice, little controversy is likely to arise from these two
situations, when either the arbitrator will withdraw or the parties will agree to the
termination of his mandate.
Controversy may, however, arise in the context of the third situation. Here, the question
will be whether the arbitrator for other reasons has failed to act with undue delay. In this
context, the Analytical Commentary suggests (26) that the following considerations would
be relevant:
It is submitted that in judging whether an arbitrator failed to act the following
considerations may be relevant: Which action was expected or required of him
in the light of the arbitration agreement and the specific procedural situation?
If he has not done anything in this regard, has the delay been so inordinate as to
be unacceptable in the light of the circumstances, including technical
difficulties and the complexity of the case? If he has done something and acted
in a certain way, did his conduct fall clearly below the standard of what may
reasonably be expected from an arbitrator? Amongst the factors influencing the
level of expectations are the ability to function efficiently and expeditiously
and any special competence or other qualifications required of the arbitrator
by agreement of the parties.
It should be noted that these considerations are based on the words ‘for other reasons fails
to act’ in the draft Model Law, which did not include the succeeding words ‘without undue
delay’ found in the 1985 Model Law and the Arbitration Act 2005. However, it is submitted
that these considerations are equally applicable to the Arbitration Act 2005.

§16.03 APPLICATION TO HIGH COURT

Section 16(2) of the Arbitration Act 2005 allows a party to apply to the High Court for a
decision on the termination of the mandate of an arbitrator, where the other party

72
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 disagrees. As stated above, this is most likely to arise where the ground for the termination
is the arbitrator’s failure to act without undue delay. To prevent dilatory tactics, section
16(2) provides that no appeal shall lie against the decision of the High Court in this regard.

§16.04 WITHDRAWAL DOES NOT IMPLY ACCEPTANCE

Section 16(3) of the Arbitration Act 2005 provides that an arbitrator’s withdrawal or a
parties’ agreement on termination due to inability or delay will not amount to an
P 120 acceptance of the validity of these grounds. This is intended to facilitate a withdrawal and
P 121 prevent lengthy controversies. (27) However, this provision will not discharge an
arbitrator where he can be shown to have acted in bad faith under section 47 of the
Arbitration Act 2005.

§16.05 MANDATORY OR NON-MANDATORY

Unlike other provisions of the Arbitration Act 2005 that follow the ‘two-level system’
allowing parties to agree first failing which the provisions of the Act apply, section 16 does
not expressly allow for the first step enabling parties to agree first but instead skips
directly to the second stage.
This gives rise to concern as parties may well have agreed by way of arbitration rules on
the rules for dealing with an arbitrator who is unable to act or who delays the proceeding.
For example, Article 15 of the 2017 ICC Rules of Arbitration provides:
Replacement of Arbitrators
1. An arbitrator shall be replaced upon death, upon acceptance by the Court
of the arbitrator’s resignation, upon acceptance by the Court of a
challenge, or upon acceptance by the Court of a request of all the parties.
2. An arbitrator shall also be replaced on the Court’s own initiative when it
decides that the arbitrator is prevented de jure or de facto from fulfilling
the arbitrator’s functions, or that the arbitrator is not fulfilling those
functions in accordance with the Rules or within the prescribed time
limits.
3. When, on the basis of information that has come to its attention, the Court
considers applying Article 15(2), it shall decide on the matter after the
arbitrator concerned, the parties and any other members of the arbitral
tribunal have had an opportunity to comment in writing within a suitable
period of time. Such comments shall be communicated to the parties and
to the arbitrators.
4. When an arbitrator is to be replaced, the Court has discretion to decide
whether or not to follow the original nominating process. Once
reconstituted, and after having invited the parties to comment, the
arbitral tribunal shall determine if and to what extent prior proceedings
shall be repeated before the reconstituted arbitral tribunal.
5. Subsequent to the closing of the proceedings, instead of replacing an
arbitrator who has died or been removed by the Court pursuant to Articles
15(1) or 15(2), the Court may decide, when it considers it appropriate, that
the remaining arbitrators shall continue the arbitration. In making such
determination, the Court shall take into account the views of the
remaining arbitrators and of the parties and such other matters that it
considers appropriate in the circumstances.
Although not expressly provided in section 16, it appears implicit from section 16(1), which
allows the parties to agree on the termination of the mandate of the arbitrator, that the
parties should also be free to agree on the procedure for such a termination. (28)
P 121
P 122

17. Appointment of Substitute Arbitrator

(1) A substitute arbitrator shall be appointed in accordance with the provisions of this Act
where –
(a) the mandate of an arbitrator terminates under section 15 or 16;
(b) an arbitrator withdraws from office for any other reason;
(c) the mandate of the arbitrator is revoked by agreement of the parties; or
(d) in any other case of termination of mandate.
(2) Unless otherwise agreed by the parties –
(a) where a single or the presiding arbitrator is replaced, any hearings previously held
shall be repeated before the substitute arbitrator; or
(b) where an arbitrator other than a single or the presiding arbitrator is replaced, any
hearings previously held may be repeated at the discretion of the arbitral tribunal.
(3) Unless otherwise agreed by the parties, any order or ruling of the arbitral tribunal made

73
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 prior to the replacement of an arbitrator under this section shall not be invalid solely
on the ground there has been a change in the composition of the arbitral tribunal.

§17.01 INTRODUCTION
Section 17 of the Arbitration Act 2005 expressly provides for the procedure for appointment
of a substitute arbitrator. Section 17 also provides, although this may be missed at first
glance, for additional grounds for the termination of the mandate of the arbitrator.
Section 17(1) of the Arbitration Act 2005 reflects Article 15 of the 1985 Model Law. Sections
17(2) and (3) of the Arbitration Act 2005 do not have equivalent provisions in the 1985 Model
Law. The 1985 Model Law does not expressly provide for the effect of substitution of an
arbitrator. This is perhaps because this was considered a matter of procedure that could
be determined by the new arbitrator under Article 19(1) of the 1985 Model Law.
Section 17(2) of the Arbitration Act 2005 appears to be based on Article 14 of the 1976
UNCITRAL Arbitration Rules, which provides:
Article 14
If under articles 11 to 13 the sole or presiding arbitrator is replaced, any
hearings held previously shall be repeated; if any other arbitrator is replaced,
such prior hearings may be repeated at the discretion of the arbitral tribunal.
This provision of the 1976 UNCITRAL Arbitration Rules has been amended to read as follows
P 122 in Article 15 of the 2013 UNCITRAL Arbitration Rules, which forms part of the 2018 AIAC
P 123 Arbitration Rules:
Article 15
If an arbitrator is replaced, the proceedings shall resume at the stage where the
arbitrator who was replaced ceased to perform his or her functions, unless the
arbitral tribunal decides otherwise.

§17.02 ADDITIONAL GROUNDS FOR TERMINATION

Section 17(1) of the Arbitration Act 2005 provides three additional grounds for the
termination of the mandate of the arbitrator.
There are therefore nine grounds for the termination of a mandate of an arbitrator:
(1) lack of impartiality under section 14(3)(a);
(2) lack of independence under section 14(3)(a);
(3) lack of agreed upon qualifications under section 14(3)(b);
(4) inability in law under section 16(1);
(5) inability in fact under section 16(1);
(6) failure to act without undue delay under section 16(1);
(7) an arbitrator’s withdrawal from office under section 17(1)(b);
(8) the parties agree to the revocation of the mandate of the arbitrator under section
17(1)(c); and
(9) any other case of termination of mandate under section 17(1)(d).
The last three of the grounds set out above are the additional grounds for termination of
the mandate of an arbitrator included in section 17 of the Arbitration Act 2005.
The grounds for termination of mandate by withdrawal of the arbitrator or by agreement of
the parties appear to have been included in section 17 as these are consensual grounds for
termination that would not require any determination by the courts, unlike the grounds
under sections 14 and 15 of the Arbitration Act 2005.
At first glance, it does not seem justified that an arbitrator should simply be entitled to
withdraw under section 17(1(b) of the Arbitration Act 2005. However, it would be difficult to
compel an arbitrator to perform where he no longer wishes to do so. It would also be
impractical to insist on a just cause for withdrawal or to list out all such possible causes.
(29) Although an arbitrator is entitled to withdraw under section 17(1)(b) of the Arbitration
Act 2005, he may be liable if he has done so in bad faith under section 47 of the Arbitration
Act 2005.
The second new ground provided by section 17(1)(c) is where the parties agree to revoke
the mandate of the arbitrator. Given the essentially consensual nature of arbitration, this
ground appears justified. (30)
P 123
P 124
The third new ground provided by section 17(1)(d) provides for any other reason for
termination of the mandate of the arbitrator and is intended as a general catch-all
provision to cover the myriad reasons that could arise in practice for the termination.

§17.03 SUBSTITUTION

74
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Apart from the additional grounds for termination, section 17(1) expressly provides that a
‘substitute arbitrator shall be appointed in accordance with the provisions of this Act’.
The use of the imperative ‘shall’, and the absence of the usual words ‘unless otherwise
agreed’ that reinforces the ‘two-level system’, would appear to suggest that this provision
on the substitution of an arbitrator is mandatory. However, the words ‘provisions of the Act’
used in section 17(1) would also include section 13 of the Arbitration Act 2005 that leaves
the parties free to agree on the procedure for the appointment of an arbitrator. These
provisions would equally apply when a substitute arbitrator is being appointed. Therefore,
although section 17(1) appears mandatory at first glance, it does allow the parties the
freedom to decide on the procedure for the appointment of a substitute arbitrator. (31)
The Arbitration Act 2005, like the 1985 Model Law, does not attempt to deal with a situation
where the process of repeated withdrawal and substitution of a party-appointed arbitrator
may be used to disrupt the proceedings. The Analytical Commentary suggests (32) that this
may be overcome by adopting a provision similar to Article 56(3) of the 1965 Washington
Convention, which provides:
If a conciliator or arbitrator appointed by a party shall have resigned without
the consent of the Commission or Tribunal of which he was a member, the
Chairman shall appoint a person from the appropriate Panel to fill the resulting
vacancy.

§17.04 EFFECT OF SUBSTITUTION

As stated above, sections 17(2) and (3) of the Arbitration Act 2005 provide for the effect of
substitution. Section 17(2) appears to be based on Article 14 of the 1976 UNCITRAL
Arbitration Rules. Sections 17(2) and (3) follow the usual ‘two-level system’ which allows the
parties to agree on the effect of substitution, failing which the default provisions in these
sections will apply.
Essentially, sections 17(2) and (3) appear to lean towards preserving as much as possible
from the arbitral proceedings prior to the substitution by only requiring a rehearing if a
P 124 single or presiding arbitrator is replaced but otherwise leaving it to the discretion of the
P 125 arbitral tribunal. These provisions also preserve the validity of rulings and orders made
by the arbitral tribunal prior to the substitutions. The intention of these provisions is to
minimize the disruption caused by the substitution.
In the context of section 17(3), it is important to note that although the substitution in itself
will not affect the validity of any prior ruling or order, other grounds might. For example, if
an arbitrator has been substituted due to the initial arbitrator’s lack of impartiality,
although the substitution in itself is unlikely to affect the prior orders he made, the lack of
impartiality is likely to have this effect.
P 125

References
1) See Analytical Commentary, Article 10, commentary 1.
2) See Analytical Commentary, Article 10, commentary 2.
3) See Analytical Commentary, Article 10, commentary 3.
4) See Analytical Commentary, Article 11, commentary 2.
5) See Analytical Commentary, Article 11, commentary 1.
6) See Analytical Commentary, Article 11, commentary 2.
7) See Analytical Commentary, Article 11, commentary 6.
8) See Analytical Commentary, Article 11, commentary 5.
9) See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para 3.031.
10) See Analytical Commentary, Article 11, commentary 8.
11) See Analytical Commentary, Article 11, commentary 7.
12) See Analytical Commentary, Article 12, commentary 2.
13) See Sundra Rajoo v. Mohamed Abd Majed & Anor [2011] 6 CLJ 923, HC.
14) See Analytical Commentary, Article 12, commentary 3.
15) See Analytical Commentary, Article 12, commentary 4.
16) See MMC Engineering supra at para. 171, HC; Sabah Medical Centre Sdn Bhd v. Syarikat
Neptune Enterprise Sdn Bhd & Anor [2012] 10 CLJ 767 at para. 2, HC.
17) See Sabah Medical Centre supra at para. 3, HC.
18) See MMC Engineering supra at para. 171.
19) See 2014 IBA Guidelines on Conflict of Interest in International Arbitration, Orange List,
para 3.1.3 and footnote 5.
20) See Analytical Commentary, Article 12, commentary 6.
21) See Analytical Commentary, Article 13, commentary 4.
22) See Analytical Commentary, Article 13, commentary 4.
23) See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para 3-074.

75
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 24) See Analytical Commentary, Article 13, commentary 5.
25) See Analytical Commentary, Article 13, commentary 6.
26) See Analytical Commentary, Article 14, commentary 4.
27) See Analytical Commentary, Article 14 bis, commentary 1.
28) See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para 3.098.
29) See Analytical Commentary, Article 15, commentary 3.
30) See Analytical Commentary, Article 15, commentary 2.
31) See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para 3.114.
32) See Analytical Commentary, Article 15, commentary 5, footnote 51.

76
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 4: Jurisdiction of the Arbitral Tribunal
Publication 18. Competence of Arbitral Tribunal to Rule on its Jurisdiction
Arbitration in Malaysia: A (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with
Commentary on the respect to the existence or validity of the arbitration agreement.
Malaysian Arbitration Act
(2) For the purposes of subsection (1)—
(a) an arbitration clause which forms part of an agreement shall be treated as an
Jurisdiction agreement independent of the other terms of the agreement; and
Malaysia (b) a decision by the arbitral tribunal that the agreement is null and void shall not
ipso jure entail the invalidity of the arbitration clause.
(3) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than
Bibliographic reference the submission of the statement of defence.
(4) A party is not precluded from raising a plea under subsection (3) by reason of that party
'Chapter 4: Jurisdiction of the having appointed or participated in the appointment of the arbitrator.
Arbitral Tribunal', in (5) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as
Thayananthan Baskaran , soon as the matter alleged to be beyond the scope of its authority is raised during the
Arbitration in Malaysia: A arbitral proceedings.
Commentary on the
Malaysian Arbitration Act, (6) Notwithstanding subsections (3) and (5), the arbitral tribunal may admit such plea if it
(© Kluwer Law International; considers the delay justified.
Kluwer Law International (7) The arbitral tribunal may rule on a plea referred to in subsection (3) or (5), either as a
2019) pp. 127 - 158 preliminary question or in an award on the merits.
(8) Where the arbitral tribunal rules on such a plea as a preliminary question that it has
jurisdiction, any party may, within thirty days after having received notice of that ruling
appeal to the High Court to decide the matter.
(9) While an appeal is pending, the arbitral tribunal may continue the arbitral proceedings
and make an award.
P 127
P 128
(10) No appeal shall lie against the decision of the High Court under subsection (8).

§18.01 INTRODUCTION
Section 18 of the Arbitration Act 2005 allows the arbitral tribunal to rule on its own
jurisdiction. For this purpose, section 18 provides that an arbitration clause in a contract
shall be treated as an independent agreement. Section 18 also provides for the timelines
and procedure for challenging an arbitral tribunal’s jurisdiction, as well as appeals from
rulings made by the arbitral tribunal on its jurisdiction.
Section 18 of the Arbitration Act 2005 reflects Article 16 of the 1985 Model Law. In
particular, sections 18(1) and (2) reflect Article 16(1), and sections 18(3)-(6) reflect Article
16(2), while sections 18(7)-(10) reflect Article 16(3).
The only significant difference between section 18 of the Arbitration Act 2005 and Article 16
of the 1985 Model Law is the use of the word ‘appeal’ in section 18(8) as compared to the
word ‘request’ in Article 16(3). The significance of the use of the word ‘appeal’ is considered
in §18.04 infra in the context of section 18(8).

§18.02 KOMPETENZ-KOMPETENZ AND SEPARABILITY

[A] The Two Principles
Sections 18(1) and (2) of the Arbitration Act 2005 provide for two important and
complementary principles in modern international commercial arbitration.
First, section 18(1) provides for the principle of Kompetenz-Kompetenz, meaning that the
arbitral tribunal has the power, or the competence, to rule on its own jurisdiction or
competency. This principle implicitly recognizes that the arbitral tribunal should be the
first to rule on its own jurisdiction with ultimate control by the courts. (1)
Second, section 18(2) provides for the separability of the arbitration clause, meaning that
even if the contract in which the clause is found is determined to be null and void, the
arbitration clause survives as an independent agreement. This complements the principle
of Kompetenz-Kompetenz, as the arbitral tribunal has the power under the notionally
separate arbitration clause to determine if the contract is null and void. (2)
These two important principles have been recognized by the Court of Appeal, in Capping
Corp Ltd & Ors v. Aquawalk Sdn Bhd & Ors [2013] 6 MLJ 579 at paragraph 28 and TNB Fuel
Services Sdn Bhd v. China National Coal Group Corp [2013] 4 MLJ 857 at paragraph 22. These
P 128 principles have also been recognized by the High Court, in Chin Keat Seng v. Lee Yoke Yam
P 129 & Ors [2009] 1 LNS 1799 at page 9 and AV Asia Sdn Bhd v. Pengarah Kuala Lumpur Regional
Centre for Arbitration & Anor [2013] 10 CLJ 115 at paragraph 17.

77
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [B] Lean Towards Arbitration
As stated above, it is implicit in the Kompetenz-Kompetenz principle provided for in
section 18(1) that the arbitral tribunal should rule on its own jurisdiction first followed by
ultimate control by the courts. This implicit rule has been recognized and enforced by the
courts, which have held that on questions of jurisdictions, the courts would lean towards
allowing the arbitral tribunal to decide these questions first.
This position has been consistently taken by the courts, starting with the important
judgment of the High Court, in CMS Energy Sdn Bhd v. Poscon Corp [2008] 6 MLJ 561 at
paragraph 18, where it was, inter alia, held:
In my view if s 10 and s 18 of the Act are read together there is [an]
unmistakeable intention of the Legislature that the court should lean towards
arbitration proceedings. Under s 10(1) of the Act, the court shall stay all
proceedings before it in respect of a matter which is the subject of an
arbitration agreement, and refer the parties to arbitration unless the court is
satisfied as to any of the condition in para (a) or (b) of the section as shown
above. And in this case none of the condition is applicable.
Subsequently, the Court of Appeal, in Capping Corp supra at paragraphs 27 and 29, inter
alia, held:
[27] The arbitration regime is now governed by Arbitration Act 2005 which in our
view dictates that the courts take a minimal interference approach and this is
reflected in s 18 of the Arbitration Act 2005 which gives the arbitrator the power
to rule on his own jurisdiction.
This power was not present in the 1952 Arbitration Act … .
…
[29] Applying that spirit of minimal interference by the courts on matters
relating disputes agreed to be resolved by arbitration, we make no further
rulings on any of the other issues raised by the respective counsel in this appeal
or the High Court. Those issues ought to be adjudicated by an arbitrator or
arbitrators.
The judgment of the High Court, in CMS Energy supra, was followed by the Court of Appeal,
in TNB Fuel supra at paragraph 21, where it was, inter alia, held:
… In any event, in our opinion, even if Her Ladyship entertained any doubts
concerning the existence of the ‘arbitration agreement’, Her Ladyship ought to
have leaned in favour of refusing the injunction so as to enable this
jurisdictional issue to be determined by the arbitral tribunal … .
The Federal Court, in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 9 CLJ 1 at
paragraph 40, held that a challenge as to jurisdiction should be made before the arbitral
tribunal and the courts should lean towards allowing jurisdictional issues to be
P 129 determined by the arbitral tribunal even when there was some doubt as to their
P 130 jurisdiction:
A challenge to the jurisdiction of an arbitrator must be made during the
arbitration proceedings itself, but not at the court hearing an application for a
stay under s. 10(1) (see: s. 18(5)). It is the arbitrator who decides the issue of
jurisdiction. Any ruling of the arbitrator that it has jurisdiction, can be appealed
to the High Court which will finally decide the matter (see: s. 18(8)).
The High Court, in Y & Y Development Sdn Bhd v. City-Lite Letrik Sdn Bhd [2014] 1 LNS 1480 at
paragraphs 36 and 37, while recognizing the principle set out in CMS Energy supra and TNB
Fuel supra, appears to suggest that where the jurisdictional question was obvious, it could
be determined by the courts rather than the arbitral tribunal:
[36] I am aware that cases such as TNB Fuel Services and CMS Energy Sdn. Bhd. v.
Poscon Corp [2008] 6 561 (a decision cited by His Lordship Ananthan Kasinather
JCA in TNB Fuel Services) urge courts to lean in favour of arbitration. However,
the present case is not one where an injunction is being sought to restrain an
arbitral tribunal from ruling on the extent of its own jurisdiction. In TNB Fuel
Services, the arbitral tribunal had been fully constituted and was ready to hear
the respondent’s jurisdictional challenge. This is not the case in the present
instance.
[37] I am of the view that, even if I were to remit this case to an arbitral tribunal
for it to exercise the powers conferred by Section 18 of the Arbitration Act 2005
and to determine the extent of its jurisdiction in this matter, the tribunal will
come to same conclusion as I have, resulting in City-Lite, as the plaintiff in the
other action, having to eventually file a fresh action (as a stay granted under
Section 10 would be a final stay of all current proceedings). The balance of
convenience here would therefore be in favour of the respondent, City-Lite.

78
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court, in Juaramedic Sdn Bhd v. MRCB Engineering Sdn Bhd [2017] 11 MLJ 427 at
paragraph 39, followed TNB Fuel supra and Press Metal supra and held that even if there
was some doubt as to the existence of an arbitration agreement, the courts should in
principle lean towards arbitration and allow the issue to be resolved by the arbitral
tribunal:
In the result, taking into account the principles of law which enjoins this court to
lean in favour of arbitration and having regard to the clear statutory power and
jurisdiction of the arbitrators to rule on their own jurisdiction, which will
encompass the question as to whether there is in existence an arbitration
agreement (as defined in s 9 of the Arbitration Act 2005) vis a vis the
procurement agreement, I am of the view that even though there is some doubt
as to whether the arbitration agreement namely cl 67 of the main agreement
has been incorporated by reference into the procurement agreement, this court
should ‘lean towards arbitration’ and let parties take up the challenge to
jurisdiction afresh in the arbitration proceedings itself … .
It is submitted that while the courts lean towards arbitration a balance should be struck. In
this regard, where the question of jurisdiction is plain and obvious, it should perhaps be
determined by the courts, especially if the arbitral tribunal has yet to be constituted.
However, where there are triable issues on jurisdiction, such issues should be left to be
determined by the arbitral tribunal first.
P 130
P 131
[C] Reform and Wide Powers
The courts recognize that the power given to the arbitral tribunal to determine its own
jurisdiction is a wide power, which was not present in the Arbitration Act 1952. The courts
also recognize that section 18 of the Arbitration Act 2005 was intended to reform the law in
this context and that such reform should be given effect to by allowing the arbitral tribunal
to rule on its own jurisdiction.
In this context, the High Court, in Standard Chartered Bank Malaysia Bhd v. City Properties
Sdn Bhd [2008] 1 CLJ 496 at paragraph 14, inter alia, held:
The only conclusion I can draw from the import of this entirely new provision in
s. 10 when read with s. 18 of the 2005 Act, is that with this new Act, Parliament
has clearly given the arbitral tribunal much wider jurisdiction and powers. And,
such powers would extend to cases even when its own jurisdiction or
competence or scope of its authority, or the existence or validity of the
arbitration agreement is challenged. A further point to note is that even when
an arbitral tribunal holds that an agreement is null and void, it ‘shall not ipso
jure entail the invalidity of the arbitration clause’ since ‘an arbitration clause
which forms part of an agreement shall be treated as an agreement
independent of the other terms of the agreement.’ Most noteworthy is that even
where its own jurisdiction or competence or its scope of authority is challenged,
it may rule on such plea either as a preliminary question or in an award on the
merits. And, where the tribunal rules against the challenge on such a plea as a
preliminary question any party may appeal to the High Court against such ruling
but while the appeal is pending the arbitral tribunal may continue with the
arbitral proceedings and make an award. With the view to preventing any
inordinate delay in resolution of disputes the legislature has decreed that no
further appeals shall lie from the High Court against a challenge on jurisdiction
of an arbitral tribunal.
Similarly, the High Court, in CMS Energy supra at paragraph 16, inter alia, held:
In my view the language used in that section confers on the arbitration a broad
and wide powers to decide on issues raised before it – not only the substantive
issues but also on the point of preliminary objections as to its jurisdiction. That
section also allows any party to the arbitration who is not happy with the
preliminary rulings by the arbitrator to appeal to the High Court against such
rulings within 30 days of its receipt.
These views have been further confirmed by the Court of Appeal, in Capping Corp supra at
paragraphs 27 and 29.
Specifically, the High Court, in Arul Balasingam v. Ampang Puteri Specialist Hospital Sdn
Bhd (formerly known as Puteri Specialist Hospital Sdn Bhd) [2012] 6 MLJ 104 at paragraphs 8
and 9, held that the wide powers conferred on the arbitral tribunal to determine its own
jurisdiction included the power to determine whether a particular arbitration clause
applies or not:
[8] I am satisfied the plaintiff have presented facts before me that disclose
bona fide serious issues to be tried without going into the merits of the same.
The serious issues are justicable by way of arbitration. The defendant submit
P 131 that cl 10 of the resident committee resident consultant agreement is

79
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 132 exhaustive and preclude in this case, reference to arbitration. Counsel for the
defendant argues the relevant clause for termination is cl 10.2, … .
[9] So s 19 of the said agreement does not apply as both parties have to be
bound by the agreement that they have put pen to. At this stage without making
any specific finding on this argument all these are matters that the proposed
arbitrator can deal with at the appropriate time … .
Another case dealing with a specific scenario is the judgment of the High Court, in AV Asia
supra at paragraph 17, where it was held that the wide power given to the arbitral tribunal
to determine its own jurisdiction included the power to determine the number of
arbitrators that would constitute the tribunal:
In my view, bearing in mind the clear terms of s. 8, the court must decline
jurisdiction. In fact, as discussed earlier, the court has no jurisdiction since none
have been given under s. 12. Parliament has legislated that where such matters
arises, it is to be dealt with under s. 18 which provides that ‘the arbitral tribunal
may rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement.’ Section 18(8) allows a party
to appeal to the High Court when the arbitral tribunal has made a preliminary
ruling on the matter. This is consistent with the principle of kompetenz-
kompetenz – Otherwise, there will be no meaning or purpose in ss. 8 and 18.
Finally, the courts have recognized that these wide powers conferred on the arbitral
tribunal, include the jurisdiction to determine questions of fraud. (3) In this context, the
High Court, in Chin Keat Seng supra at page 10, inter alia, held:
It was apparent that when the facts of this instant case were applied in the
context of the new law, it could not be a simple matter to be decided on the
basis of an allegation of misrepresentation, fraud or general invalidity of the
Shareholders’ Agreement. The jurisdiction of an arbitral tribunal could not be
excluded so simply, nor could resort to arbitration proceedings. On the facts,
the relevant arbitration clause was very broadly worded, and it would be best if
parties were held to their choice of dispute resolution. It was best if the arbitral
tribunal, when appointed, to rule on its own jurisdiction.

[D] Potential Limits to These Wide Powers

Although the courts have generally given effect to sections 18(1) and (2) of the Arbitration
Act 2005 and have indeed leaned in favour of arbitration, there have been decisions by the
courts that have sought to limit the wide powers conferred on the arbitral tribunal by these
provisions. The courts have, in these judgments, limited the application of section 18(1) by
strictly construing this statutory provision. The courts have also limited section 18(1) by
reading this provision together with other provisions in the Arbitration Act 2005.
P 132 For example, the High Court, in Total Safe Sdn Bhd v. Tenaga Nasional Berhad & Anor [2009]
P 133 1 LNS 420, interpreted the word ‘may’ in section 18(1) as meaning that the courts
retained the power to determine jurisdictional issues. The High Court also decided that
where the jurisdictional issue was raised in court rather than in the arbitral proceedings,
the issue could be determined by the courts. In this context, the High Court, in Total Safe
supra at pages 8 and 9, inter alia, held:
The submission of the Second Defendant that the existence of an arbitration
agreement is within the jurisdiction of the arbitration tribunal is unacceptable.
For this, the court refers to the provision of section 18 (1) of the Arbitration Act
2005 which provides as follows:
‘The arbitral tribunal may rule on its own jurisdiction, including any objections
with respect to the existence or validity of the arbitration agreement.’
(emphasis mine)
The word ‘may’ that is present in the said provision connotes that it does not
oust the jurisdiction of this court in making a ruling on the existence or the
validity of the arbitration agreement. The arbitral tribunal may decide on the
issue if it is raised in the arbitration proceedings. However, since the case
herein has been commenced in this court, then the court can decide the same.
At this stage, and considering the fact that the Second Defendant has not been
able to show to this court the existence, of any arbitration agreement, it is just
that the proceedings be continued in court. There is no justification for this
court to stay the proceedings herein pending arbitration.
It is submitted that, while the High Court, in Total Safe supra, was correct in holding that
the courts retained the power to determine jurisdictional issues, there does not appear to
be an appreciation of the jurisprudence that the courts would lean towards allowing the
arbitral tribunal to rule on its own jurisdiction first.
The High Court, in Cyber Business Solutions Sdn Bhd v. Elsag Datamat SpA [2012] 1 CJL 115,
interpreted the word ‘own’ in section 18(1) of the Arbitration Act 2005 strictly. Here, there
was a dispute between the parties as to which of two arbitration clauses applied. One

80
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitration clause provided for arbitration governed by the ICC Rules of Arbitration, while
the other provided for the KLRCA Arbitration Rules. A party referred the dispute to the ICC
and the International Court of Arbitration decided under Article 6(2) of the ICC Rules of
Arbitration that the arbitration should proceed. Despite this, the High Court narrowly
construed the word ‘own’ in section 18(1) to mean that an arbitral tribunal constituted
under the ICC Rules of Arbitration could not determine if another set of arbitration rules
applied or not. In this context, the High Court, in Cyber Business supra at paragraph 46,
inter alia, held:
Further, if the ICC can determine other arbitral tribunal’s jurisdiction, then
similarly the KLRCA could also determine on the jurisdiction of the ICC, which
would not solve the issue at hand ie, which arbitration clause/forum of
arbitration is applicable. Decision has to be made as to which forum can
arbitrate on the disputes between the plaintiff and the defendant. It certainly
cannot be the ICC nor the KLRCA to determine on the jurisdictional issue in view
of the competing forum.
It is submitted that the judgment, in Cyber Business supra, does not appear to appreciate
P 133 the distinction between an arbitral tribunal and institution. There is no reason in principle
P 134 why an arbitral tribunal constituted under any particular set of rules cannot determine
which of several competing rules of arbitration should apply to the proceeding. Indeed,
this would appear to be a common jurisdictional issue that may need to be determined by
an arbitral tribunal, especially where there are two competing arbitration clauses.
The High Court, in Assar Senari Holdings Sdn Bhd v. Teratai Sanjung Holdings (M) Sdn Bhd
[2011] MLJU 834, narrowly construed the words ‘arbitration agreement’ used in section 18(1)
to mean that the arbitral tribunal could only determine the existence of the arbitration
agreement but not the substantive contract between the parties. In this context, the High
Court, in Assar Senari supra at page 2, inter alia, held:
My view of the applicability of section 18(1) in respect of this case is as follows.
Although section 18(1) gives broad powers to the Arbitral Tribunal to determine
the validity or existence of the arbitration agreement, it does not confer power
on the Arbitral Tribunal to determine the validity of substantive agreement. In
the instant case, it is common ground that the PDA and SA were not signed by
the parties. Counsel for plaintiff has argued that there is a triable issue whether
the substantive agreement exists even if the existence of the arbitration
agreement can be decided by the Arbitral Tribunal. My reading of sections 9, 10
and 18 is that the scheme of the Arbitration Act presupposes the existence of a
substantive agreement between the parties and leaves the issue of the validity
and existence of the arbitration agreement to the Arbitral Tribunal. It is true
that under section 8, unless otherwise provided, no court shall intervene in any
of the matters governed by the Arbitration Act 2005. However, section 18(1)
provides that the Arbitral Tribunal may only rule on the existence or validity of
the arbitration agreement. It does not say that the Arbitral Tribunal can
determine the existence of the substantive agreement. In this case, the
threshold issue is whether the parties had entered into the PDA and SA. If it is
found that the parties had not entered into an agreement at all, there would be
nothing for the Arbitral Tribunal to ‘arbitrate’. The function of the Arbitral
Tribunal is to adjudicate on ‘disputes’ … .
Similarly, the High Court, in Awan Timur Palm Oil Mills Resources (Johor) Sdn Bhd v. Inno-
Wangsa Oils & Fats Sdn Bhd [2018] MLJU 622 at paragraph 79, inter alia, held:
I find that the arbitrators had no business to take on jurisdiction to adjudicate
whether there was a contract in the first place. It was not a clear enough case,
and they certainly did not have to take it upon themselves to adjudicate on the
issue of formation of contract. The civil court would be better equipped to
handle such a dispute which would involve dealing with conflicting evidence.
It is submitted that the arbitral tribunal has jurisdiction to determine the existence of
both the arbitration agreement and the substantive contract between the parties. This is
implicit from section 18(2)(b), which expressly provides for a situation where the arbitral
tribunal has determined that the ‘agreement’ meaning the substantive contract is null and
void.
P 134
P 135

§18.03 TIME LIMITS

Sections 18(3) and (5) of the Arbitration Act 2005 provide time limits for jurisdictional
challenges before the arbitral tribunal. These time limits are to prevent delay of the
proceedings.
Section 18(3) provides that a plea that the arbitral tribunal does not have jurisdiction shall
not be raised later than the submission of the statement of defence. Section 18(3) provides
for a situation where a party alleges that the arbitral tribunal entirely lacks jurisdiction
due to, for example, the absence of an arbitration agreement.

81
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Section 18(5) provides that a plea that the arbitral tribunal is exceeding its authority
should be raised as soon as the alleged act occurs. Section 18(5) provides for a situation
where the arbitral tribunal, though having jurisdiction, has acted in a manner outside the
scope of its jurisdiction. For example, if an arbitral tribunal directs that evidence be
provided in relation to an issue that has not been referred to it, this would be in excess of
its jurisdiction. (4)
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of The Lao People’s
Democratic Republic [2017] 6 AMR 219 at paragraphs 203 and 215, recognized the different
time limits under sections 18(3) and (5). The Federal Court decided that if a party did not
comply with these time limits and the other party did not object to this non-compliance,
the other party could not subsequently complain about such non-compliance:
[203] It was so submitted, and we agree that ‘a plea that the arbitral tribunal
does not have jurisdiction shall be raised not later than in the statement of
defence’ (Article 21(3) of the UNCITRAL Arbitration Rules 1976, which is the
equivalent of Section 18(3) of AA 2005). But in relation to a plea that the arbitral
tribunal is exceeding the scope of its authority, that ‘shall be raised as soon as
the matter alleged to be beyond the scope of its authority is raised during the
arbitral proceedings’ (section 18(5) of AA 2005). In other words, a plea that the
arbitral tribunal is exceeding the scope of its authority could be raised during
the arbitral proceedings. Hence, ‘time to object’ depends on whether it is a plea
under section 18(3) or 18(5) of AA 2005. But that was not distinguished in the
submissions before us.
…
[215] The Arbitration Act 2005 by Sundra Rajoo and WSW Davidson at 171
proposed that whether a jurisdictional issue could be later raised would
depend on the nature of the jurisdictional issue; see also A Guide to the
UNCITRAL Model Law on International Commercial Arbitration by Howard M.
Holtzmann & Joseph E. Neuhaus at 482-483]. Equally, if a party raises an out of
time challenge but the other party does not object to the lateness of the
challenge, and the tribunal rules on the plea, the other party cannot rely on the
delay to prevent the High Court from deciding the matter under art 16(3) [the
equivalent of section 18(8) of AA 2005]’ (Williams & Kawharu supra at 7.4.6). On
the facts, even if the plea under section 18(3) or (5) of AA 2005 were made out of
time, the Appellants could not rely on delay, which was not an issue during the
P 135 arbitral proceedings, to prevent the High Court from deciding the matter under
P 136 Section 37 of AA 2005. On the facts, where there was no objection to lateness,
the Appellants could not raise the ‘out of time’ argument. As such, we reject the
‘out of time’ argument.
The Federal Court, in Thai-Lao Lignite supra, did not draw a distinction between the
derogable and non-derogable provisions of the Arbitration Act 2005. It is submitted that
such a distinction should have been drawn in accordance with section 7. If such a
distinction had been made, it would have been recognized that sections 18(3) and (5) are
non-derogable provisions that cannot be waived.
The High Court, in Usahasama SPNB-LTAT Sdn Bhd v. ABI Construction Sdn Bhd [2016] 7 CLJ
275, further clarified that if a plea of lack of jurisdiction was taken prior to the Statement of
Defence, there could be no question of waiver or estoppel arising prior to such a plea being
taken. In this context, the High Court, in Usahasama SPNB-LTAT supra at paragraphs 39, 42,
inter alia, held:
[39] The defendant relied on various correspondences and contended that the
action by the defendant to bring the disputes to arbitration had never been
opposed, objected to or refuted by the plaintiff and hence constituted a waiver
on the part of the plaintiff towards the precondition stipulated in cl. 54 of the
contract …
…
[42] There can be no estoppel as against a statute. See the case of JMB
Silverpark Sdn Bhd v. Silverpark Sdn Bhd & Anor [2012] 1 LNS 1082; [2013] 9 MLJ
714 at p. 726. In United Malayan Banking Corporation Sdn Bhd v. Syarikat
Perumahan Luas Sdn Bhd [1998] 3 MLJ 352b Edgar Joseph Jr J (as he then was) at
p. 356 held: ‘The defence of estoppel accordingly fails since there cannot be an
estoppel to evade the plain provisions of a statute.’ Much earlier in Kok Hoong
v. Leong Cheong Kweng Mines Ltd [1963] 1 LNS 61; [1964] 1 MLJ 49 Viscount
Radcliffe, Privy Council, at p. 54 had affirmed that ‘… a party cannot set up
estoppels in the face of a statute …’ Here the plaintiff had raised the
jurisdictional challenge at the first preliminary meeting and in the
circumstance it was timeously and promptly raised.
Sections 18(4) and (6) of the Arbitration Act 2005 provide measures to prevent the harsh
application of sections 18(3) and (5).
Section 18(4) provides that a party is not precluded from raising a plea of lack of

82
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 jurisdiction under section 18(3) by reason of having appointed or participated in the
appointment of the arbitrator. A party who intends to challenge the jurisdiction of the
arbitral tribunal may wish to still participate in the proceedings and nominate an
arbitrator. In the light of section 18(4), such a party is not required to make any reservation
with respect to his intended plea of lack of jurisdiction when participating in the
appointment of an arbitrator. (5)
Section 18(6) allows the arbitral tribunal to admit a plea of lack of jurisdiction or excess of
jurisdiction even if the time limits in sections 18(3) and (5) have not been complied with
where the delay is justified. Given the intention of sections 18(3) and (5) to prevent delay, it
P 136 is submitted that very strong grounds would be required to justify a delay. These grounds
P 137 should be limited to situations where the party intending to raise the plea did not have
notice of the jurisdictional issue or where it was practically impossible to raise the plea
earlier.
Although sections 18(3) and (5) provide time limits for raising pleas of lack of jurisdiction or
excess of jurisdiction, the Arbitration Act 2005 does not provide for the consequences of
failing to comply with these time limits. The Arbitration Act 2005 mirrors the 1985 Model
Law in this regard, which also does not provide for the consequences of non-compliance.
It appears clear that if the time limits are not complied with and the arbitral tribunal does
not admit the plea under section 18(6), the plea cannot be pursued in the arbitral
proceedings.
It is, however, less clear whether the challenge on jurisdiction can still be taken in an
application to set aside an award or in resisting the enforcement of the award after a plea
was not taken within the time limits before the arbitral tribunal. It is submitted that
generally a party should be precluded from relying on a jurisdictional issue in the setting
aside or enforcement proceedings after having failed to comply with the time limits during
the arbitral proceedings. Otherwise, the time limits provided for in sections 18(3) and (5)
would be meaningless. Furthermore, the arbitral tribunal would not have had the first
opportunity to rule on its own jurisdiction in accordance with the principles discussed in
the context of sections 18(1) and (2) above.
However, there are limits to the extent to which a party that has failed to comply with the
time limits in sections 18(3) and (5) should be precluded from subsequently raising
jurisdictional issues in setting aside or enforcement proceedings. Where it is an issue of
public policy or the arbitrability of the subject matter of the dispute, it is submitted that a
party should not be precluded from subsequently raising the issue even if the time limits
have not been complied with. This is because these defects cannot be corrected by
submission to the arbitration proceedings. (6)

§18.04 RULINGS AND APPEALS

Sections 18(7)-(10) of the Arbitration Act 2005 set out the scheme for rulings by the arbitral
tribunal on pleas with respect to jurisdiction and appeals to the High Court from such
rulings.
Section 18(7) allows the arbitral tribunal the discretion to decide whether to determine a
plea on jurisdiction as a preliminary question or as an award on the remits.
If the arbitral tribunal determines the plea on jurisdiction in an award on the merits, then
a dissatisfied party may apply to set aside such an award under section 37 of the
Arbitration Act 2005.
P 137 Alternatively, if the arbitral tribunal determines the plea on jurisdiction as a ruling on a
P 138 preliminary question, then two scenarios can arise under section 18(8):
(1) where the arbitral tribunal rules that it has no jurisdiction, then that is the end of the
arbitral proceedings, and the claimant can decide whether to pursue civil
proceedings; or
(2) where the arbitral tribunal rules that it has jurisdiction, any party may appeal to the
High Court within thirty days in accordance with section 18(8). No appeal will lie
against the decision of the High Court in this regard under section 18(10).
The scheme of sections 18(7)-(10) has been lucidly explained by the High Court, in
Paramasivam Karuppannr Gounder v. PT Synergy Oil Nusantara Indonesia [2014] AMEJ 1240
at paragraph 15:
My interpretation of the above AA provisions is as follows:
(a) any party may –
(i) dispute the arbitral tribunal’s jurisdiction – s 18(1) and (3) AA;
(ii) object with respect to the existence or validity of an ‘arbitration
agreement’ (defined in s 9 AA and will be discussed below) – s 18(1)
and (3); and/or
(iii) raise the contention that the arbitral tribunal has exceeded its
scope of authority – s 18(5) AA. (Preliminary Matter);
(b) the arbitral tribunal has a discretion under s 18(7) AA to rule on the

83
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Preliminary Matter –
(i) as a preliminary question (Preliminary Question); or
(ii) in an ‘award’ [see the definition of ‘award’ in s 2(1) AA] on the merits;
(c) if an arbitral tribunal has ruled as a Preliminary Question that it has no
jurisdiction to decide a dispute (No Jurisdiction Ruling), s 18(8) AA does not
provide for any appeal to the High Court against a No Jurisdiction Ruling. If
an arbitral tribunal rules that it has no jurisdiction to hear a dispute, that
dispute has to be resolved in the courts;
(d) only when an arbitral tribunal has ruled as a Preliminary Question that it
has jurisdiction to decide a dispute (Ruling) –
(i) any party may appeal to the High Court against the Ruling under s
18(8) AA; and
(ii) according to s 18(10) AA, no appeal to the Court of Appeal can be
made against the High Court’s decision under s 18(8) AA;
(e) if the arbitral tribunal has ruled on the Preliminary Matter in the award on
the merits, a party may apply to the High Court –
(i) under s 37 (1) AA to set aside the award; or
(ii) to refer any question of law arising out of an award in accordance
with s 42(1) AA; and
(f) any decision of the High Court under ss 37 (1) and 42 AA can be appealed to
the Court of Appeal – please see s 67(1) of the Courts of Judicature Act 1964
1964 (CJA) and s 43 AA.
The High Court, in Paramasivam Karuppannr supra at paragraph 40, further held that an
arbitral tribunal’s ruling on jurisdiction need not include reasons unlike an award:
Section 18 AA does not require the Arbitral Tribunal to provide written grounds
P 138 for the Arbitral Tribunal’s Ruling. Accordingly, the Arbitral Tribunal’s lack of
P 139 written grounds to support the Arbitral Tribunal’s Ruling is not fatal in this
case. In any event, for reasons explained above, I am satisfied that the Arbitral
Tribunal’s Ruling has not been made erroneously as there is a written
‘arbitration agreement’ between the Plaintiff and Defendant in this case.
The High Court, in Usahasama SPNB-LTAT supra at paragraph 16, clarified that an appeal
under section 18(8) will be by way of a rehearing and not merely a review of the arbitrator’s
ruling. The High Court would accordingly hear the issue afresh without being influenced by
the arbitrator’s ruling. The High Court emphasized that, unlike section 67(1) of the English
Arbitration Act 1996 that uses the word ‘apply’, section 18(8) of the Malaysian Arbitration
Act 2005 uses the word ‘appeal’, which clearly meant that a rehearing was required:
This court would follow the same approach as if hearing the issue afresh and
uninfluenced by the prior decision of the arbitrator either way, respecting
always the cogency of reasons given by the arbitrator but unrestrained by what
has undergirded his decision.
The Federal Court, in Thai-Lao Lignite supra at paragraph 205, decided that where an
arbitral tribunal declined to rule on a plea on jurisdiction as a preliminary question, a
party was entitled to participate in the proceedings and await the award:
In the instant case, there was no immediate ruling on the plea, be it under
section 18(3) or (5) of AA 2005. Without an immediate ruling by the Arbitral
Tribunal that it had jurisdiction, the Respondent could not invoke section 18(8)
of AA 2005 and appeal to the High Court to decide the matter. The Respondent
could only await a ruling in the award, and meanwhile participate in the
arbitration, which was one of the options open to the Respondent (see Redfern
and Hunter on International Arbitration 5th Edition at 5.120 and 5126).
The High Court, in Dceil Imex Sdn Bhd v. Pembinaan Punca Cergas Sdn Bhd [2014] 7 CLJ 552,
considered the application of section 30(5) of the Limitation Act 1953 to section 18(8) of the
Arbitration Act 2005.
In this context, section 30(5) of the Limitation Act 1953 provides as follows:
Where the High Court orders that an award be set aside or orders, after the
commencement of an arbitration, that the arbitration shall cease to have effect
with respect to the dispute referred, the Court may further order that the period
between the commencement of the arbitration and the date of the order of the
Court shall be excluded in computing the time prescribed by this Act or any
such written law as aforesaid for the commencement of proceedings (including
arbitration) with respect to the dispute referred.
The High Court, in Dceil Imex supra at paragraph 62, held that where the High Court had
decided on appeal under section 18(8) of the Arbitration Act 2005 that the arbitral tribunal
had no jurisdiction, then the ‘arbitration shall cease to have effect’ for the purposes of

84
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 section 30(5) of the Limitation Act 1953, allowing for time to be excluded for the purpose of
limitation.
P 139
P 140

19. Power of Arbitral Tribunal to Order Interim Measures

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a
party, grant interim measures.
(2) An interim measure is any temporary measure, whether in the form of an award or in
another form, by which, at any time prior to the issuance of the award by which the
dispute is finally decided, the arbitral tribunal orders a party to –
(a) maintain or restore the status quo pending the determination of the dispute;
(b) take action that would prevent or refrain from taking action that is likely to cause
current or imminent harm or prejudice to the arbitral process itself;
(c) provide a means of preserving assets out of which a subsequent award may be
satisfied;
(d) preserve evidence that may be relevant and material to the resolution of the
dispute; or
(e) provide security for the costs of the dispute.

19A. Conditions for Granting Interim Measures

(1) The party requesting for the interim measures order under paragraphs 19(2)(a), (b) or (c)
shall satisfy the arbitral tribunal that –
(a) harm not adequately reparable by an award of damages is likely to result if the
measure is not ordered, and such harm substantially outweighs the harm that is
likely to result to the party against whom the measure is directed if the measure is
granted; and
(b) there is a reasonable possibility that the requesting party will succeed on the
merits of the claim.
(2) The determination on the reasonable possibility referred to in paragraph (1)(b) shall not
affect the discretion of the arbitral tribunal in making any subsequent determination
relating to the dispute.
(3) In respect of the request for an interim measure order under paragraph 19(2)(d), the
conditions in subsections (1) and (2) shall apply only to the extent the arbitral tribunal
considers appropriate.
P 140
P 141

19B. Application for Preliminary Orders and Conditions for Granting

Preliminary Orders
(1) Unless otherwise agreed by the parties, a party may, without notice to any other party,
make a request for an interim measure together with an application for a preliminary
order directing a party not to frustrate the purpose of the interim measure requested.
(2) The arbitral tribunal may grant a preliminary order provided that the arbitral tribunal
considers that prior disclosure of the request for the interim measure to the party
against whom the measure is directed risks frustrating the purpose of the interim
measure.
(3) The conditions specified in section 19Ashall apply to any preliminary order provided that
the harm to be assessed under paragraph 19A(1)(a) is the harm that is likely to result
from the order being granted or not.

19C. Specific Regime for Preliminary Orders

(1) Immediately after the arbitral tribunal has made a determination in respect of an
application for a preliminary order, the arbitral tribunal shall –
(a) give notice to all parties of the request for the interim measure, the application for
the preliminary order, the preliminary order, if any, and all other communications,
including by indicating the content of any oral communication, between any party
and the arbitral tribunal in relation thereto; and
(b) give an opportunity to any party against whom a preliminary order is directed to
present its case at the earliest practicable time.
(2) The arbitral tribunal shall decide immediately on any objection to the preliminary
order.
(3) A preliminary order shall expire after twenty days from the date on which the order was
issued by the arbitral tribunal.
(4) Notwithstanding subsection (3), the arbitral tribunal may issue an interim measure
which adopts or modifies the preliminary order, after the party against whom the
preliminary order is directed has been given notice and an opportunity to present his

85
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 case.
(5) A preliminary order shall be binding on the parties but shall not be subject to any
enforcement by the High Court.
(6) The preliminary order referred to in subsection (5) shall not constitute an award.
P 141
P 142

19D. Modification, suspension or termination

The arbitral tribunal may modify, suspend or terminate an interim measure it has granted,
upon an application of any party or, in exceptional circumstances and upon prior notice to
the parties, on the arbitral tribunal’s own initiative.

19E. Provision of Security

(1) The arbitral tribunal may require the party requesting an interim measure to provide
appropriate security in connection with the measure.
(2) The arbitral tribunal shall require the party applying for a preliminary order to provide
security in connection with the order unless the arbitral tribunal considers it
inappropriate or unnecessary to do so.

19F. Disclosure
(1) The arbitral tribunal may require any party to immediately disclose any material
change in the circumstances on the basis of which the interim measure or preliminary
order was requested or applied or granted.
(2) The party applying for a preliminary order shall disclose to the arbitral tribunal all the
circumstances that are likely to be relevant to the arbitral tribunal’s determination on
whether to grant or maintain the order and such obligation shall continue until the
party against whom the order has been requested has had an opportunity to present its
case.

19G. Costs and Damages

(1) The party requesting for an interim measure or applying for a preliminary order shall be
liable for any costs and damages caused by the interim measure or the preliminary
order to any party if the arbitral tribunal later determines that, in the circumstances,
the interim measure or the preliminary order should not have been granted.
(2) The arbitral tribunal may award such costs and damages referred to in subsection (1) at
any point during the proceedings.

19H. Recognition and Enforcement

(1) Subject to the provisions of section 19I, an interim measure issued by an arbitral
tribunal shall be recognized as binding and, unless otherwise provided by the arbitral
tribunal, enforced upon application to the competent court, irrespective of the country
in which it was issued.
P 142
P 143
(2) The party who is seeking or has obtained recognition or enforcement of an interim
measure shall immediately inform the court of any termination, suspension or
modification of that interim measure.
(3) The court where recognition or enforcement is sought may, if it considers it proper,
order the requesting party to provide appropriate security if the arbitral tribunal has
not already made a determination with respect to security or where such a decision is
necessary to protect the rights of third parties.

19I. Grounds for Refusing Recognition or Enforcement

(1) Recognition or enforcement of an interim measure may be refused only –
(a) at the request of the party against whom it is invoked if the High Court is satisfied
that –
(i) such refusal is warranted on the grounds set forth in subparagraph 39(1)(a)
(i), (ii), (iii), (iv), (v) or (vi);
(ii) the arbitral tribunal’s decision with respect to the provision of security in
connection with the interim measure issued by the arbitral tribunal has not
been complied with; or
(iii) the interim measure has been terminated or suspended by the arbitral
tribunal or, where so empowered, by the court of the State in which the
arbitration takes place or under the law of which that interim measure was
granted; or
(b) if the High Court finds that –
(i) the interim measure is incompatible with the powers conferred upon the

86
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Court, but the Court may decide to reformulate the interim measure to the
extent necessary, without modifying its substance, to adapt it to the Court’s
powers and procedures for the purposes of enforcing that interim measure;
or
(ii) any grounds set forth in subparagraph 39(1)(b)(i) or (ii) apply to the
recognition and enforcement of the interim measure.
(2) Any determination made by the High Court on any of the grounds in subsection (1) shall
be effective only for the purposes of the application to recognize or enforce the interim
measure.
(3) The High Court where recognition or enforcement is sought shall not, in making any
determination on any of the grounds in subsection (1), undertake a review of the
substance of the interim measure.

19J. Court-ordered Interim Measures

(1) The High Court has the power to issue an interim measure in relation to arbitration
proceedings, irrespective of whether the seat of arbitration is in Malaysia.
P 143
P 144
(2) The High Court shall exercise the power referred to in subsection (1) in accordance with
its own procedures in consideration of the specific features of international arbitration.
(3) Where a party applies to the High Court for any interim measure and an arbitral
tribunal has already ruled on any matter which is relevant to the application, the High
Court shall treat any findings of fact made in the course of such ruling by the arbitral
tribunal as conclusive for the purposes of the application.

§19.01 INTRODUCTION
Section 19 of the Arbitration Act 2005 allows the arbitral tribunal to grant interim measures
and preliminary orders. The section, which is the longest in the Arbitration Act 2005,
includes detailed provisions on the conditions for the grant of such measures and orders
and for the enforcement of such measures.
Section 19 of the Arbitration Act 2005 closely follows Article 17 of the 2006 Model Law. The
significant differences are:
(1) section 19(2)(e) expressly allows the arbitral tribunal to grant security for costs. There
is no equivalent provision in the 2006 Model Law;
(2) section 19F(2) omits the words ‘Thereafter, paragraph (1) of this article shall apply …’
at the end of Article 17F(2);
(3) section 19H(3) omits the words ‘of the State’ between the words ‘court’ and ‘where’,
which are found in Article 17H(3);
(4) sections 19I and 19J specify ‘the High Court’, which is defined in section 2, in
substitution of the word ‘court’ used in Articles 17I and 17J; and
(5) section 19J(3) is not found in the 2006 Model Law.
Apart from these changes, there are other minor changes in drafting between section 19
and Article 17. The significance of the changes listed out above is considered below in the
context of each specific provision.
Article 17 of the 2006 Model Law was subsequently reflected in Article 26 of the 2010
UNCITRAL Arbitration Rules, which provides:
1. The arbitral tribunal may, at the request of a party, grant interim
measures.
2. An interim measure is any temporary measure by which, at any time prior
to the issuance of the award by which the dispute is finally decided, the
arbitral tribunal orders a party, for example and without limitation, to:
(a) Maintain or restore the status quo pending determination of the
dispute;
(b) Take action that would prevent, or refrain from taking action that is
likely to cause,
(i) current or imminent harm or
(ii) prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent
award may be satisfied; or
P 144
P 145
(d) Preserve evidence that may be relevant and material to the
resolution of the dispute.
3. The party requesting an interim measure under paragraphs 2 (a) to (c)
shall satisfy the arbitral tribunal that:
(a) Harm not adequately reparable by an award of damages is likely to

87
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 result if the measure is not ordered, and such harm substantially
outweighs the harm that is likely to result to the party against whom
the measure is directed if the measure is granted; and
(b) There is a reasonable possibility that the requesting party will
succeed on the merits of the claim. The determination on this
possibility shall not affect the discretion of the arbitral tribunal in
making any subsequent determination.
4. With regard to a request for an interim measure under paragraph 2 (d), the
requirements in paragraphs 3 (a) and (b) shall apply only to the extent the
arbitral tribunal considers appropriate.
5. The arbitral tribunal may modify, suspend or terminate an interim
measure it has granted, upon application of any party or, in exceptional
circumstances and upon prior notice to the parties, on the arbitral
tribunal’s own initiative.
6. The arbitral tribunal may require the party requesting an interim measure
to provide appropriate security in connection with the measure.
7. The arbitral tribunal may require any party promptly to disclose any
material change in the circumstances on the basis of which the interim
measure was requested or granted.
8. The party requesting an interim measure may be liable for any costs and
damages caused by the measure to any party if the arbitral tribunal later
determines that, in the circumstances then prevailing, the measure should
not have been granted. The arbitral tribunal may award such costs and
damages at any point during the proceedings.
9. A request for interim measures addressed by any party to a judicial
authority shall not be deemed incompatible with the agreement to
arbitrate, or as a waiver of that agreement.
Article 26 of the 2010 UNCITRAL Arbitration Rules does not expressly allow for preliminary
orders. However, despite this omission, it is submitted that an arbitral tribunal under the
2010 UNCITRAL Arbitration Rules would have the authority to issue preliminary orders. (7)
Article 26 of the 2010 UNCITRAL Arbitration Rules in turn form part of the 2018 AIAC
Arbitration Rules. In addition, Rule 8 of the AIAC Arbitration Rules provides that a party in
need of an urgent interim measure prior to the constitution of the arbitral tribunal may
submit a request to appoint an emergency arbitrator to the Director of the AIAC in
accordance with Schedule 3 of the 2018 AIAC Arbitration Rules.
The present section 19 was introduced by the Arbitration (Amendment) (No 2) Act 2018.
Prior to the amendment, section 19 provided:
(1) Unless otherwise agreed by the parties, a party may apply to the arbitral
tribunal for any of the following orders:
(a) security for costs;
(b) discovery of documents and interrogatories;
P 145
P 146
(c) giving of evidence by affidavit;
(d) the preservation, interim custody or sale of any property which is the
subject-matter of the dispute.
(2) The arbitral tribunal may require any party to provide appropriate
security in connection with such measure as ordered under subsection (1).
(3) Unless otherwise agreed by the parties, sections 38 and 39 shall apply to
orders made by an arbitral tribunal under this section as if a reference in
those sections to an award were a reference to such an order.
The former section 19 of the Arbitration Act 2005 was based on Article 17 of the 1985 Model
Law but provided for the type of interim measures that could be granted and also for the
enforcement of such measures.
The current section 19, like the current Article 17 of the 2006 Model Law, is considerably
more detailed. We consider the detailed provisions of the current section 19 below.

§19.02 DEFINITION OF INTERIM MEASURES

Section 19(2) of the Arbitration Act 2005 defines an interim measure as ‘any temporary
measure, whether in the form of an award or in another form, by which, at any time prior to
the issuance of the award by which the dispute is finally decided, the arbitral tribunal
orders’. An interim measure is therefore:
(1) of a temporary measure;
(2) made prior to the final award; and
(3) in the form of an award or other form.
The distinction drawn is between a temporary measure and a final award that resolves the

88
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 disputes between the parties. This temporary nature of the measure is emphasized by
section 19A(2) which provides that the arbitral tribunal’s determination of a reasonable
possibility of the applicant succeeding on the merits of the claim for the purposes of an
interim measure will not affect any subsequent determination of the dispute.
Section 19(2) is intentionally neutral on the question of form, leaving it to the arbitral
tribunal to grant the interim measure in the form of an award or any other form. Section
19(2) is also intended to be neutral on the question of whether an interim measure granted
in the form of an award is enforceable in accordance with the 1958 New York Convention.
(8)

§19.03 TWO PRECONDITIONS FOR INTERIM MEASURES

P 146 Section 19(1) of the Arbitration Act 2005 sets out two preconditions for the grant of interim
P 147 measures:
(1) the arbitration agreement should not preclude such measures; and
(2) a party must make a request for such measures.
These two preconditions reinforce the principle of party autonomy. The parties are
entitled to agree that the arbitral tribunal shall not have the power to grant interim
measures or a particular type of such measures.
Furthermore, an arbitral tribunal may only grant an interim measure at the request of a
party. An arbitral tribunal may not grant such measures on their own initiative. Section
19(1) does not provide for any particular form for such a request for interim measures. In
practice, such a request is likely to be made in writing with sufficient particulars to enable
the other party to respond and the arbitral tribunal to consider the request. However,
there is nothing to preclude such a request being made orally, and, an arbitral tribunal
may permit such a request, for a particularly urgent measure.

§19.04 FIVE TYPES OF INTERIM MEASURES

Section 19(2) of the Arbitration Act 2005, after defining interim measures, proceeds to
describe five types of interim measures. The five interim measures are broadly defined
and overlap to an extent.
These five interim measures are identical to the five interim measures that may be
granted by the High Court under section 11(1) save that the words ‘whether by way of arrest
of property or bail or other security pursuant to the admiralty jurisdiction of the High
Court’ in section 11(1)(c) have been omitted from section 19(1)(c). Therefore, reference may
be made to §11.05 supra for an understanding of the nature of these five types of interim
measures.
However, the conditions for the grant of interim measures by an arbitral tribunal are
expressly set out in section 19A. This is unlike the position with respect to interim measures
that may be granted by the High Court under section 11, where the conditions are not set
out in the Arbitration Act 2005 but are to be determined based on judgments of the courts,
as set out in §11.05 supra.
It is unclear whether the five interim measures described in section 19(2) are intended to
be exhaustive. Article 26(2) of the 2010 UNCITRAL Arbitration Rules expressly provides that
the interim measures listed are ‘for example and without limitation’ to the power of the
arbitral tribunal to grant interim measures. However, no such express provision is found in
Article 17(2) of the 2006 Model Law or section 19(2) of the Arbitration Act 2005, which adopts
it. It is submitted that the five types of interim measures in section 19(2) should not be
regarded as exhaustive or limiting the arbitral tribunal’s powers to grant interim measures
that would be appropriate in the light of the particular circumstances.
P 147
P 148
Section 19(2)(e) allows the arbitral tribunal to grant security for costs. There is no
equivalent provision in Article 17 of the 2006 Model Law. There is uncertainty (9) as to
whether an order for security for costs comes within Articles 17(2)(b) or (c) of the 2006
Model Law. To avoid this uncertainty, section 19(2)(e) expressly allows an arbitral tribunal
to order security for costs.

§19.05 THREE CONDITIONS FOR INTERIM MEASURES

Section 19A(1) sets out the three conditions for the grant of interim measures. The three
conditions are that:
(1) harm not adequately reparable by an award of damages is likely to result if the
measure is not ordered;
(2) such harm substantially outweighs the harm that is likely to result to the party
against whom the measure is directed if the measure is granted; and
(3) there is a reasonable possibility that the requesting party will succeed on the merits
of the claim.
The applicant must satisfy all three conditions, which are mandatory, as the word ‘shall’ is

89
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 used in section 19A(1), and conjunctive, as the word ‘and’ is used between section 19A(1)(a)
and (b). These are conditions that need to be satisfied by the applicant and not criteria
used for assessment by the arbitral tribunal, as can be seen from the express provisions of
section 19A(1).
The three conditions are similar to those expressed by the Court of Appeal, in Keet Gerald
Francis Noel John v. Mohd Noor @ Harun Abdullah & Ors [1995] 1 MLJ 193 at pages 206 and
207 in the context of interim injunctions. Although these three conditions are similar, they
are not identical to the conditions in Keet Gerald supra. Furthermore, these are express
statutory conditions, and, as such, emphasis will be placed on the precise wording and
intent of the statute, as opposed to the broad principles expressed in a judgment. As such,
we consider each of these three express statutory conditions below.

[A] Harm Not Adequately Reparable by an Award of Damages

The applicant must prove that they are likely to suffer harm that cannot be ‘adequately
reparable’ by damages. The applicant is not required to prove irreparable harm, as it was
felt this would be setting the bar too high, and, furthermore, almost any harm can be
compensated by a monetary award. (10)
P 148 The applicant must prove that they are ‘likely’ to suffer such harm but does not have to
P 149 prove this as a certainty. This is because, at an interlocutory stage, and prior to actually
having suffered such harm, the applicant would only be able to prove a likelihood.

[B] Such Harm Substantially Outweighs the Harm Likely to Result to the
Respondent
The applicant must also prove that the harm they are likely to suffer ‘substantially
outweighs’ the harm likely to result to the respondent. This condition involves the familiar
balance of hardship test.
The test as expressed in section 19A(1)(a) is onerous on the applicant, as the applicant
must show not only that the harm they are likely to suffer will outweigh the harm likely to
be suffered by the respondent but also that such harm ‘substantially’ outweighs the harm
likely to be suffered by the respondent. (11)

[C] Reasonable Possibility That the Applicant Will Succeed on the Merits
The applicant must further prove that there is a reasonable possibility that their claim will
succeed on the merits. Although not expressed, it is implicit that the applicant must, in
this context, prove that the arbitral tribunal has jurisdiction over the claim, as the claim
cannot succeed if the arbitral tribunal does not have jurisdiction. This implicit
requirement is controversial, as an investigation as to whether an arbitral tribunal has
jurisdiction may require a full hearing and may be difficult to undertake at an interlocutory
stage. (12)
The applicant must prove a ‘reasonable possibility’ of success. The applicant must
accordingly prove a prima facie case, meaning that if the facts as alleged are proved, this
might possibly lead to success on the claim, or, to put it negatively, that the claim is not
frivolous. (13)
Section 19A(2) expressly provides that the arbitral tribunal’s determination that there is a
reasonable possibility of success will not affect the arbitral tribunal’s discretion in making
any subsequent determination. This provision emphasizes that the arbitral tribunal’s
determination of a reasonable possibility of success at an interlocutory stage should not
affect the final award.
The High Court, in the context of the High Court’s power to grant interim measures under
section 11, has explained this, in Bumi Armada Navigation Sdn Bhd v. Mirza Marine Sdn Bhd
[2015] MLJU 953 at paragraphs 49-51 and 90(a). These principles would be equally
P 149 applicable to an arbitral tribunal’s determination of a reasonable possibility of success. As
P 150 a matter of practice, and based on Bumi Armada supra at paragraph 90(a), it may be
prudent for an arbitral tribunal to expressly state in the interim award that the
determination will not affect the final award. (14)

§19.06 APPLICATION OF THE THREE CONDITIONS

The applicant must satisfy all three conditions for the interim measures described in
sections 19(2)(a), (b) and (c). Section 19A(3) provides that the three conditions will only
apply ‘only to the extent the arbitral tribunal considers appropriate’ for the interim
measure under section 19(2)(d), which is for the preservation of evidence.
This is because the conditions for the grant of an interim measure to preserve evidence
differ from other interim measures. The conditions for the grant of an interim measure to
preserve evidence are explained in §11.05[D] supra in the context of the grant of such a
measure by the High Court and would be equally applicable here.
However, it must be emphasized that the three conditions are not inapplicable to the
grant of an interim measure to preserve evidence. The arbitral tribunal must still take
these three conditions into account when considering an application for an interim

90
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 measure to preserve evidence. However, section 19A(3) allows the arbitral tribunal some
discretion in the application of these three conditions in an application for an interim
measure to preserve evidence. (15)
Section 19A(3) does not address the application of these three conditions to an application
for security for costs. This is presumably because the 2006 Model Law does not provide for
security for costs and the drafters of the Arbitration Act 2005 while inserting section 19(2)(e)
did not amend section 19A(3) to address this additional interim measure.
The conditions for the grant of security for costs by the High Court are explained in
§11.05[E] supra. These conditions should be applicable to a grant of security for costs by an
arbitral tribunal. These conditions differ from the conditions for the grant of other interim
measures. As such, it is submitted that the same position which applies to interim
measures to preserve evidence should apply to security for costs. The arbitral tribunal
should take the three conditions into account in an application for security for costs but
should have discretion in the application of the three conditions.

§19.07 DEFINITION OF PRELIMINARY ORDERS

A preliminary order is an interim measure made by the arbitral tribunal on an ex parte
basis to prevent the purpose of the interim measure being frustrated. The term
‘preliminary order’ is used to emphasize the temporary and extraordinary nature of such
an order, as well as the distinct statutory regime which governs such orders. (16)
P 150
P 151
The inclusion of provisions on preliminary orders in the 2006 Model Law was controversial.
These provisions were not included in the 2010 UNCITRAL Arbitration Rules. These
provisions, however, are included in the Arbitration Act 2005, as sections 19B and 19C.
The controversy arose because the proponents of such orders argued that the courts in
most countries were entitled to grant temporary injunctions on an ex parte basis, where
the court was satisfied that informing the other party may undermine the effectiveness of
the temporary injunction sought. Furthermore, in practice, even before the 2006 Model
Law, arbitral tribunals did grant interim measures on an ex parte basis. Finally, the
absence of such provisions in Article 17 of the 2006 Model Law may have given the
unwanted impression that an arbitral tribunal does not have jurisdiction to grant an ex
parte order. (17)
On the other hand, those opposed to the adoption of the provisions on preliminary orders
in the 2006 Model Law argued that such ex parte orders were contrary to the essence of
arbitration, which required each party to be heard. (18)
Section 19 of the Arbitration Act 2005, and Article 17 of the 2006 Model Law, which the Act
reflects, is a compromise, in the light of these arguments. Preliminary orders are permitted
but there is an additional condition and several safeguards put in place.

§19.08 TWO PRECONDITIONS FOR PRELIMINARY ORDERS

Section 19B(1) of the Arbitration Act 2005 sets out two preconditions for the grant of
preliminary orders:
(1) the arbitration agreement should not preclude such orders; and
(2) a party must request an interim measure and apply for such a preliminary order.
These two preconditions are the same as the preconditions for interim measures and
reference may be made to §19.03 supra.

§19.09 ADDITIONAL CONDITIONS FOR PRELIMINARY ORDERS

Section 19B(3) provides that the applicant for a preliminary order must satisfy the three
conditions for the grant of an interim measure in section 19A, which are considered in
§19.05 supra. However, the harm to be assessed is the harm in relation to the preliminary
order and not the interim measure.
P 151 In addition to satisfying these conditions, the applicant would also need to satisfy the
P 152 arbitral tribunal that the disclosure of the request for an interim measure ‘risks
frustrating the purpose of the interim measure’. This additional condition appears stricter,
as it does not include words like ‘likely’ or ‘reasonably possibility’ in the three conditions
in section 19A(1). This strict additional condition is in accordance with a preliminary order
being extraordinary in nature.

§19.10 FIVE SAFEGUARDS FOR PRELIMINARY ORDERS

Section 19C of the Arbitration Act 2005 lays down several safeguards for preliminary orders
to address the concerns raised. First, the arbitral tribunal must immediately after
determining the preliminary order give notice of all documents and oral communications
in relation to the preliminary order to the respondent. The arbitral tribunal must give such
notice whether or not the preliminary order was allowed. (19)
Second, the arbitral tribunal must immediately after determining the preliminary order

91
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 allow the respondent an opportunity to be heard. This addresses one of the concerns
raised in relation to preliminary orders by ensuring that the respondent is heard at the
earliest opportunity.
Third, the arbitral tribunal must decide on any objection to the preliminary order. This will
be after the respondent has been given a reasonable opportunity to be heard. The arbitral
tribunal’s decision must be made ‘immediately’ after such an opportunity has been
allowed to the respondent. The repeated use of the word ‘immediately’ in sections 19C(1)
and (2) emphasizes the extremely short timeline for notice, objection and decision on a
preliminary order.
Fourth, to further reinforce this immediacy, section 19C(3) provides that the preliminary
order will expire within twenty days of the arbitral tribunal issuing such order. Section
19C(4) then provides that notwithstanding the expiry of the preliminary order, the arbitral
tribunal may grant an interim measure that adopts or modifies such order after the
arbitral tribunal has given notice to the respondent and allowed them an opportunity to
be heard.
Fifth, and finally, sections 19C(5) and (6) provide that a preliminary order is binding on the
parties but is not an award that can be enforced. A preliminary order is therefore in the
nature of a procedural order rather than an award. (20) A preliminary order is binding on
the parties and is usually respected and complied with. If a preliminary order is not
complied with, an arbitral tribunal will be entitled to draw an adverse inference or take
this into account when awarding costs. (21)
P 152
P 153

§19.11 MODIFICATION, SUSPENSION OR TERMINATION

Section 19D of the Arbitration Act 2005 provides that the arbitral tribunal may modify,
suspend or terminate an interim measure it has granted. An interim measure may be
granted in the form of an award or any other form. An interim measure granted in the form
of award is generally regarded as final. The question therefore arises as to how such an
award may be modified, suspended or terminated. It is implicit in section 19D that any
modification, suspension or termination will be subsequent to the interim measure being
granted. As such, where the interim measure is in the form of an award, the modification,
suspension or termination should be by way of a subsequent award that modifies,
suspends or terminates the earlier award, rather than by way of amendment to the earlier
award. The word ‘amend’ was deliberately not included in Article 17D, which section 19D is
based on. (22)
The arbitral tribunal would generally modify, suspend or terminate an interim measure
due to the emergence of new facts and circumstances. There was, indeed, a suggestion that
Article 17D of the 2006 Model Law, which section 19D is based on, expressly provides that a
modification, suspension or termination was to be ‘in light of additional information or a
change of circumstances’. However, this suggestion was rejected on the grounds that it may
be superfluous and unduly restrict the discretion of the arbitral tribunal. (23)
Section 19D requires an application to be made by a party for modification, suspension or
termination. However, in exceptional circumstances, the arbitral tribunal may act on its
own initiative but must give prior notice to the parties. The requirement for an application
by a party or prior notice by the arbitral tribunal is to ensure party autonomy. (24)

§19.12 SECURITY
Section 19E(1) of the Arbitration Act 2005 allows the arbitral tribunal to require that the
applicant for interim measures provide security for such measures. The arbitral tribunal is
entitled to require such security because the respondent may be subjected to substantial
unnecessary costs if it is later found that an interim measure was wrongly granted. The
arbitral tribunal has the discretion whether to require such security, as can be seen from
the use of the word ‘may’ in section 19E(1).
By contrast, section 19E(2) makes it mandatory for the arbitral tribunal to require the
applicant for preliminary orders unless the arbitral tribunal considers it unnecessary or
P 153 inappropriate to do so. The stricter requirement for costs in relation to preliminary orders
P 154 is because such orders are sought on an ex parte basis and, as such, there is an
increased risk that such orders may later be found to have been wrongly granted, in the
light of further information.
Although not expressly provided for in section 19E, the arbitral tribunal is entitled to
require the applicant to provide security either at the time the application is made or
subsequently. (25)

§19.13 DISCLOSURE
The arbitral tribunal is entitled to modify, suspend or terminate an interim measure or
preliminary order, in the light of new circumstances. In order to do this, the arbitral
tribunal is empowered under section 19F(1) to require any party to disclose any material
change in circumstance. The arbitral tribunal is entitled to require such disclosure from

92
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 either party, as the words ‘any party’ are used in section 19F(1). The arbitral tribunal is
allowed to do this to ensure that the interim measure or preliminary order remains
justified.
Section 19F(2) provides that an applicant for a preliminary order must make full and frank
disclosure and that this obligation continues until the respondent has had an opportunity
to present their case. As the application for a preliminary order is made ex parte, the
applicant is obliged to make full and frank disclosure. This is a further safeguard that is in
place in relation to such orders.

§19.14 COSTS AND DAMAGES

Section 19G(1) of the Arbitration Act 2005 provides that an applicant for an interim
measure or preliminary order will be liable for any costs or damage to the respondent if
the arbitral tribunal subsequently finds that such measure or order should not have been
granted. Section 19G(1) should be read together with section 19E, which requires the
provision of security for the costs the applicant may be liable for.
The applicant will be liable for such costs or damages if the arbitral tribunal subsequently
finds that the interim measure or preliminary order should not have been granted.
Therefore, the final award being against the applicant does not necessarily mean that the
applicant will be liable for such costs and damages. Instead, there should be a specific
determination by the arbitral tribunal that the particular measure or order should not
have been granted.
Section 19G(2) provides that the arbitral tribunal may award such costs and damages at
any point during the arbitral proceedings.

§19.15 RECOGNITION AND ENFORCEMENT OF INTERIM MEASURES

P 154 Sections 19H and 19I of the Arbitration Act 2005 provide for the recognition and
P 155 enforcement of interim measures, as well as the grounds for refusing such recognition.
Sections 19H and 19I of the Arbitration Act 2005 are based on Articles 17H and 17I of the
2006 Model Law.
Sections 19H and 19I on the recognition and enforcement of interim measures mirror
sections 38 and 39 on the recognition and enforcement of awards; in the same way Articles
17H and 17I mirror Articles 35 and 36. The intention was to have a regime tested in practice
for the enforcement of interim measures. (26)
In particular, section 19H(1) is similar to section 38(1). However, section 19H(1) dispenses
with the procedural requirements set out in sections 38(2)-(4). The procedural
requirements in section 38 on applications to enforce awards are likely to be complied
with in relation to interim measures, as the requirements are practical. This may also be
formalized by way of amendments to civil procedure rules.
The enforcement provisions in section 19H(1) are also broader than section 38(1) in two
material aspects:
(1) section 19H(1) applies to interim measures made in any country unlike
section 38(1), which is limited to awards made in States which are a party
to the 1958 New York Convention; and
(2) an application under section 19H(1) need not be made to the High Court
but to any competent court, which presumably includes the subordinate
courts and the High Court, unlike section 38(1) that requires an application
to be made to the High Court. (27)
Section 19H(1) significantly does not provide that the interim measure will be enforced by
entry as a judgment, unlike section 38(1). The interim measure not being entered as a
judgment may explain the absence of procedural requirements and the broader
application of these provisions. The interim measures are likely to be enforced in practice
as orders of the courts.
Sections 19H(2) and (3) provide for scenarios that arise due to the temporary nature of
interim measures, which is unlike an award under section 38. Section 19H(2) requires the
applicant, in making the application and subsequently, if successful, to notify the courts of
the termination, suspension or modification of the interim measure by the arbitral
tribunal. This is to ensure that the court’s assistance is only granted in relation to interim
measures that remain justified and enforceable.
Section 19H(3) entitles the court to require the applicant to provide security in two
scenarios:
(1) where the arbitral tribunal has not determined the need for such security; or
(2) where such security is needed to protect the rights of third parties.
P 155
P 156

§19.16 REFUSAL OF RECOGNITION AND ENFORCEMENT OF INTERIM

93
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 MEASURES
Section 19I(1) on the grounds for refusing recognition and enforcement of interim measures
reflects section 39(1) on the grounds for refusing recognition and enforcement of awards.
In this context, reference may be made to §39.03 infra on the words ‘may be refused’,
§39.04 infra on the word ‘only’, §39.05 infra on the words ‘at the request of the party against
whom it is invoked’. These words are used in both sections 19I(1) and 39(1).
The grounds in sections 19I(1) and 39(1) are the same save that section 19I(1):
(1) does not include the ground in section 39(1)(a)(vii); and
(2) includes three additional grounds in sections 19I(1)(a)(ii) and (iii) and 19I(1)(b)(i).
The three additional grounds have been included to provide for the temporary and
extraordinary nature of interim measures. First, section 19I(1)(a)(ii) allows recognition to be
refused where the applicant has not complied with the arbitral tribunal’s decision on the
provision of security. This gives force to any arbitral tribunal’s decision on the provision of
security, as failure to comply with such a decision may result in the interim measure not
being recognized and enforced.
Second, section 19I(1)(a)(iii) allows recognition to be refused where the interim measure
has been terminated or suspended by the arbitral tribunal that granted such measure or
by the courts in the place of arbitration. Section 19I(a)(iii) is a modification of section 39(1)
(a)(vii) to provide for interim measures, in particular, the temporary nature of an interim
measure, which can be subsequently terminated or suspended by the arbitral tribunal
under section 19D or by the courts in the place of arbitration.
Third, section 19I(1)(b)(i) gives the High Court some flexibility, where the interim measure is
found to be incompatible with the High Court’s powers, to reformulate the interim measure
in a manner compatible with its powers without affecting such measure’s substance. This
provision is essential to cater for interim measures made in States other than Malaysia,
where the interim measures may not have taken into account the powers of the High Court
and the applicable civil procedure rules. The High Court has the power to reformulate such
measures to ensure that they are compatible with the powers of the High Court.
Section 19I(2) emphasizes that any determination made by the High Court on an
application to recognize and enforce an interim measure is limited to such an application
and does not extend beyond that.
Section 19I(3) expressly provides, what is implicit in sections 37 and 39, that any
determination of the High Court on an application to recognize and enforce an interim
measure will not involve a review of the substance or merits of such measures.
P 156
P 157

§19.17 COURT-ORDERED INTERIM MEASURES

Section 19J(1) of the Arbitration Act 2005 provides that the High Court has the power to
issue interim measures in relation to arbitration proceedings regardless of whether the
seat is in Malaysia or not. Section 19J(1) is similar to section 11(3) of the Arbitration Act 2005
and reference may be made to §11.06 supra.
Section 19J(2) provides that the High Court in granting such interim measures shall have
regard to ‘the specific features of international arbitration’. This is not expressly provided
for in section 11 but has always been an implicit requirement. The most important
consideration for the High Court is that interim measures should only be granted, where
such measures will aid, facilitate or support the arbitration proceedings and not where
they will impede such proceedings. These general principles are considered in §11.02
supra, in particular §11.02[D] supra.
Section 19J(3) provides that, in an application for interim measures, the High Court will be
bound by any finding of fact made by the arbitral tribunal. This provision is identical to
section 11(2) and reference may be made to §11.02 supra.
P 157

References
1) See Analytical Commentary, Article 16, commentary 1.
2) See Analytical Commentary, Article 16, commentary 2.
3) See Chut Nyak Isham Nyak Ariff v. Malaysian Technology Development Corporation Sdn
Bhd & Ors [2009] 9 CLJ 32 at paras 5-7, 12.
4) See Analytical Commentary, Article 16, commentary 7.
5) See Analytical Commentary, Article 16, commentary 6.
6) See Analytical Commentary, Article 16, commentary 10.
7) See David D Caron and Lee M Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 531.

94
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 8) See UNCITRAL Note by the Secretariat ‘Settlement of Commercial Disputes: Interim
Measures’ (39th Session 25 Apr. 2006) A/CN.9/605 at para. 5.
9) See David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (2nd
edn, LexisNexis 2017) at para. 9.2.6.
10) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 521.
11) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 522.
12) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 523.
13) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 523.
14) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 523.
15) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 524.
16) See UNCITRAL Note by the Secretariat ‘Settlement of Commercial Disputes: Interim
Measures’ (39th Session 25 Apr. 2006) A/CN.9/605 at para. 10.
17) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 531.
18) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 531.
19) See UNCITRAL Note by the Secretariat ‘Settlement of Commercial Disputes: Interim
Measures’ (39th Session 25 Apr. 2006) A/CN.9/605 at para. 14.
20) See UNCITRAL Note by the Secretariat ‘Settlement of Commercial Disputes: Interim
Measures’ (39th Session 25 Apr. 2006) A/CN.9/605 at para. 11.
21) See David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (2nd
edn, LexisNexis 2017) at para. 9.8.1.
22) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at pp 525-526.
23) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 526.
24) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 526.
25) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 527.
26) See David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (2nd
edn, LexisNexis 2017) at para. 9.9.
27) See Uba Lrus Bina Asia Sdn Bhd v. Quirk & Associates Sdn Bhd & Anor [2016] 4 CLJ 468 at
para. 37, HC.

95
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 5: Conduct of Arbitral Proceedings
Publication 20. Equal Treatment of Parties
Arbitration in Malaysia: A The parties shall be treated with equality and each party shall be given a fair and reasonable
Commentary on the opportunity of presenting that party’s case.
Malaysian Arbitration Act
§20.01 INTRODUCTION
Jurisdiction Section 20 of the Arbitration Act 2005 provides for the equal treatment of parties and that
each party shall be given a fair and reasonable opportunity to be heard.
Malaysia
Section 20 of the Arbitration Act 2005 is identical to Article 18 of the 1985 Model Law save
that the right to a ‘full’ opportunity in the 1985 Model Law has been substituted with a ‘fair
Bibliographic reference and reasonable’ opportunity to present one’s case.

'Chapter 5: Conduct of Article 18 of the 1985 Model Law is in turn based on Article 15 of the 1976 UNCITRAL
Arbitral Proceedings', in Arbitration Rules, which provides:
Thayananthan Baskaran , General Provisions
Arbitration in Malaysia: A
Commentary on the Article 15
Malaysian Arbitration Act, 1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in
(© Kluwer Law International; such manner as it considers appropriate, provided the parties are treated
Kluwer Law International with equality and that at any stage of the proceedings each party is given
2019) pp. 159 - 202 a full opportunity of presenting his case.
2. If either party so requests at any stage of the proceedings, the arbitral
tribunal shall hold hearings for the presentation of evidence by witnesses,
including expert witnesses, or for oral argument. In the absence of such a
request, the arbitral tribunal shall decide whether to hold such hearings or
whether the proceedings shall be conducted on the basis of documents
and other materials.
3. All documents or information supplied to the arbitral tribunal by one
party shall at the same time be communicated by that party to the other
party.
Elements of Article 15 of the 1976 UNCITRAL Arbitration Rules are reflected in Articles 18, 19
and 24 of the 1985 Model Law.
P 159
P 160
Article 17 of the 2013 UNCITRAL Arbitration Rules expands on Article 15 of the 1976
UNCITRAL Arbitration Rules and provides that:
General Provisions
Article 17
1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in
such manner as it considers appropriate, provided that the parties are
treated with equality and that at an appropriate stage of the proceedings
each party is given a reasonable opportunity of presenting its case. The
arbitral tribunal, in exercising its discretion, shall conduct the
proceedings so as to avoid unnecessary delay and expense and to provide
a fair and efficient process for resolving the parties’ dispute.
2. As soon as practicable after its constitution and after inviting the parties
to express their views, the arbitral tribunal shall establish the provisional
timetable of the arbitration. The arbitral tribunal may, at any time, after
inviting the parties to express their views, extend or abridge any period of
time prescribed under these Rules or agreed by the parties.
3. If at an appropriate stage of the proceedings any party so requests, the
arbitral tribunal shall hold hearings for the presentation of evidence by
witnesses, including expert witnesses, or for oral argument. In the absence
of such a request, the arbitral tribunal shall decide whether to hold such
hearings or whether the proceedings shall be conducted on the basis of
documents and other materials.
4. All communications to the arbitral tribunal by one party shall be
communicated by that party to all other parties. Such communications
shall be made at the same time, except as otherwise permitted by the
arbitral tribunal if it may do so under applicable law.
5. The arbitral tribunal may, at the request of any party, allow one or more
third persons to be joined in the arbitration as a party provided such
person is a party to the arbitration agreement, unless the arbitral tribunal
finds, after giving all parties, including the person or persons to be joined,

96
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the opportunity to be heard, that joinder should not be permitted
because of prejudice to any of those parties. The arbitral tribunal may
make a single award or several awards in respect of all parties so involved
in the arbitration.
The 2013 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules.
The fifth and final draft of the 1985 Model Law had an Article 19 that combined the present
Articles 18 and 19 of 1985 Model Law. (1) However, the provisions of the present Article 18 of
the 1985 Model Law were separated and presented as a single article because it
constituted a ‘fundamental principle, which was applicable to the entire arbitral
proceedings’. (2)

§20.02 FUNDAMENTAL PRINCIPLE

P 160 As stated above, section 20 of the Arbitration Act 2005 constitutes a fundamental principle.
P 161 This principle is part of a duo that forms the rules of natural justice. The first principle is
the right to be heard, which is reflected in section 20, and the second principle is the rule
against bias, which is reflected in section 14 and has been considered in §14.01-§14.04
supra.
As one of the two constituent principles of the rules of natural justice, section 20 is of
particular significance and has been recognized as such. The UNCITRAL deliberately
placed Article 18 of the 1985 Model Law alone to reflect its fundamental importance.

§20.03 SETTING ASIDE

Section 20 has been most frequently considered by the courts in the context of an
application to set aside an arbitral award under sections 37(1)(b)(ii) and (2)(b) of the
Arbitration Act 2005. Section 37(1)(b)(ii) provides that an award may be set aside where it is
in conflict with public policy. Section 37(2)(b) then clarifies that an award may be in
conflict with public policy where there has been a breach of the rules of natural justice.
The High Court, in Infineon Technologies (M) Sdn Bhd v. Orisoft Technology Sdn Bhd
(previously known as Orisoft Technology Berhad) and another application [2011] 7 MLJ 539,
drew a distinction between a breach of the rules of natural justice in a domestic and
international arbitration. While a more restrictive approach should be taken in
international arbitration, a broader approach may be taken in domestic arbitration. In the
context of international arbitration, what was required was a breach of the most basic
notions of morality and justice. While in the context of domestic arbitration, what was
required was a substantial miscarriage of justice. Notably, in adopting this test, the High
Court was influenced by the KLRCA Arbitration Rules applicable at the time.
In this regard, the High Court, in Infineon Technologies supra at paragraphs 74 and 75, inter
alia, held:
[74] … the approach is not to refuse to register on the ground of conflict of
public policy unless the most basic notions of morality and justice would be
offended. Thus the approach is very restrictive, being grounded in the
upholding of international comity. A less rigid approach should, in principle,
apply where the award is a Domestic Arbitral Award, although the comparative
jurisprudence on this matter cannot as yet be said as approximating a uniform
approach … .
[75] I find the approach taken by the New Zealand Court of Appeal [in Downer
Hill Joint Venture v. Government of Fiji [2005] 1 NZLR 554] particularly attractive,
and the test of ‘substantial miscarriage of justice’ is particularly apposite
bearing in mind what is provided in the KLRCA Rules, namely r 13 which uses the
same concept. To recapitulate, r 13 states that non-compliance ‘shall not affect
the validity or legality of the arbitral proceedings or the award unless such non-
compliance had occasioned a substantial miscarriage of justice’ … .
The High Court, in Sabah Medical Center Sdn Bhd v. Syarikat Neptune Enterprise Sdn Bhd
[2011] 1 LNS 849, considered an application to set aside an arbitral award due to the
P 161 breach of the rules of natural justice. The High Court regarded a ‘fair and reasonable’
P 162 opportunity to be heard as a lesser standard than a ‘full’ opportunity to be heard, with
this lower standard being further diluted by the arbitral tribunal’s discretion under section
21(2) of the Arbitration Act 2005. The High Court held that if a decision in an arbitral award
is based on grounds other than those in relation to which a breach of natural justice may
have occurred, then the breach will not affect the award.
In this context, the High Court, in Sabah Medical Center supra at pages 18 and 19, inter alia,
held:
To recap, the plaintiff is relying on the contention that the arbitrator had
breached the principle of natural justice. I think it can be said that the spirit of
the Act is that the court should intervene only in exceptional circumstances and
this is reflected in provisions contained in it. Sec 20 of the Act prescribes that
the arbitral tribunal is only required to provide the parties a ‘fair and

97
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 reasonable opportunity’ to present their case. In sec 21(2) of the Act, the arbitral
tribunal is given a full discretion to determine the manner in which the
proceeding is to be conducted. The court can only be seized of jurisdiction if it
is the view that the Award is in conflict with the public policy of Malaysia or is
tainted with fraud or corruption or the arbitral proceeding is inconsistent with
the principle of natural justice. Case law is such that the courts must take a ‘non
interventionist’ approach.
In a similar vein, the High Court, (3) in MMC Engineering Group Bhd & Anor v. Wayss &
Freytag (M) Sdn Bhd & Anor [2015] MLJU 477, clarified that for the courts to provide a
remedy, a party must show that they have suffered actual prejudice as a result of a breach
of natural justice. However, the court is not to put itself in the position of the arbitrator and
consider whether the court would have reached a different result if the rules of natural
justice had been observed.
In this context, the High Court, in MMC Engineering supra at paragraphs 221 and 223, inter
alia, held:
[221] The Courts are not required and it is not the principle that the Court must
be satisfied that it would have come to a different result before the presence of
prejudice is established. The Courts are not required to assume the role of the
Arbitral Tribunal … .
…
[223] Therefore, before the Plaintiffs can properly and legitimately say that that
there is a breach of natural justice on the facts here, the Plaintiffs must show
that the Award and the Arbitral Tribunal’s conclusions and reasoning were not
based on any of the parties’ arguments in the arbitration. If indeed there was
such a conclusion or reasoning that was the basis of the Award, the Plaintiffs
must still show that that train of reasoning could not have been reasonably
anticipated or foreseen from the arguments and evidence presented during the
arbitration proceedings. The Plaintiffs must further show that if adequate notice
of such train of reasoning had been given, the Plaintiffs could possibly have
persuaded the Arbitral Tribunal to reach a result in the Plaintiffs’ favour if not a
result less adverse to the Plaintiffs.
P 162
P 163
Again, similarly, the High Court, in Tanjung Langsat Port Sdn Bhd v. Trafigura Pte Ltd &
Another Case [2016] 4 CLJ 927, in considering an application to set aside decided that:
(1) a breach of the rules of natural justice does not in itself mean that the award is in
conflict with public policy;
(2) therefore, even where there has been a breach of the rules of natural justice, the
courts retain the discretion as to whether to set aside the award as being in conflict
with public policy; and
(3) the courts will exercise their discretion to set aside an award as being in conflict with
public policy if a breach of the rules of natural justice caused actual prejudice to a
party.
In this context, the High Court, in Tanjung Langsat supra at paragraphs 63 and 64, 71, 77,
inter alia, held:
[63] Hence with respect I am of the view from that not all breaches of the rules
of natural justice will ipso facto mean that the arbitral award will be in conflict
with public policy and will be liable to be set aside under s. 37(1)(b)(ii) of the AA
2005 … .
[64] Even if it can be shown that there has been a breach of natural justice, the
court retains the discretion whether to set aside the arbitral award for being in
conflict with public policy under s. 37(1)(b)(ii) of the AA 2005 … .
…
[71] Hence it is my respectful view in order to set [aside] the arbitral award for
being in conflict with public policy, it must be shown that the alleged breach of
natural justice has caused actual prejudice to the aggrieved party.
…
[77] In any event in following the approach in Soh Beng Tee, taking it to the
highest and even if it could be argued that the majority tribunal did not comply
with the rules of natural justice in failing to consider TLP’s defence under cl. 13.4
of the storage agreement, in my respectful view this is not a breach which has
caused actual prejudice or ‘shock the conscience’ or offends ‘fundamental
principles of justice and morality’ (See MTM Millenium, PT Asuransi).
The Court of Appeal, in Tridant Engineering (M) Sdn Bhd v. Ssangyong Engineering and
Construction Co Ltd [2016] MLJU 599, in considering an application to set aside, decided
that even if an issue was not specifically pleaded, so long as the rules of natural justice

98
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 were not breached, in the sense that the parties had an opportunity to be heard with
regards to the unpleaded issue, an arbitral award will not be set aside.
In this context, the Court of Appeal, in Tridant Engineering supra at paragraphs 30, 31 and
35, inter alia, held:
[30] Further, in any arbitral proceeding, the primary concern is to ensure that
the rules of natural justice are complied with. This much is made clear in
section 20 of the Arbitration Act 2005 which says that the parties shall be
treated with equality and each party shall be given a fair and reasonable
opportunity of presenting that party’s case.
P 163
P 164
[31] Having what have been said in preceding paragraphs uppermost in our
minds, we took an approach that the Appellant’s failure to plead sections 26
and 27 of Limitation Act 1953 was not fatal to its claim as the Respondent was
given every opportunity to submit on that issue. There was also no evidence to
say that the Respondent had suffered a disadvantage or deprived of an
opportunity to ventilate that issue. In fact, the learned Judge had found that the
rules of natural justice had not been breached on this issue except she found
that ‘there is a new difference between the dispute referred and the dispute
that he was finally determining.’
…
[35] The principle distilled from the above is simply this. As long as there has
not been any breach of the rules of natural justice and parties had been given
ample opportunity to submit on the issue which was ancillary to the claim or
defence, the strict rule of pleadings does not apply in the arbitral regime. In our
present case, the reliance of sections 26 and 27 of the Limitation Act was a
matter ancillary to the alternative defence of the Respondent.
The Court of Appeal, in Garden Bay Sdn Bhd v. Sime Darby Property Berhad [2018] 2 MLJ 636
at paragraph 23, decided in an application to set aside an arbitral award that if there was
a breach of natural justice, the arbitral tribunal should be given an opportunity to resume
the arbitral proceedings under section 37(6) to cure the breach:
Section 37(6) of the AA 2005 is pari materia to article 34(4) of the UNCITRAL
Model Law 1986. The Model Law regime does provide a procedure to save the
award for breach of natural justice … That is to say, s 37(6) does not give an
option to set aside the award as of right at the trial stage or even at the apex
stage. The courts must be vigilant of the jurisprudence related to s 37(6) and
should not set aside the award in the first instance and create miscarriage of
justice.
The High Court, in Tan Kong Han v. QDB Ventures Sdn Bhd [2016] MLJU 1510, in particular,
decided that an arbitral tribunal was not bound to accept a position put forward by one
party or the other but was entitled to take an alternative position based on the evidence
before the arbitral tribunal. In this context, the High Court, in Tan Kong Han supra at
paragraphs 31 and 33, inter alia, held:
[31] More importantly, I do not find any case of any breaches or meaningful
breaches of natural justice made out by the plaintiff. I do not see a case
established that the learned Arbitrator’s decision of affixing 1.4.2012 as the date
when practical completion was achieved violates the principles of natural
justice. The Arbitrator was required to deal with that very question and I agree
with the defendant that she was not restricted to any date suggested by the
parties.
…
[33] Contrary to what the plaintiff claims, the date identified by the learned
Arbitrator was based on evidence before her. It may not have been the date
picked by either party but it was a date that she arrived at based on her
reasons. Amongst others, she had relied on the Architect’s letter of 3.4.2012
which the plaintiff claims to be erroneous as the Architect had testified that the
letter had been issued by mistake. That may have been the case, but the
learned Arbitrator was entitled to still examine that letter and reached the
conclusion that she did.
P 164
P 165
The Court of Appeal, in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd and another appeal
[2018] MLJU 968 at paragraphs 32, 33, 36 and 38, considered an arbitrator’s findings on a
claim for loss of profit under a construction contract based on the arbitrator’s view of what
a reasonable profit margin in the construction industry would be. The arbitrator did not
disclose these views to the parties or give them an opportunity to respond. The profit
margin used by the arbitrator was also not based on either parties’ evidence or
submissions. The Court of Appeal held that the arbitrator had breached the rules of natural

99
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 justice by deciding on the claim for loss of profit based on his views without allowing the
parties an opportunity to respond. Significantly, the Court of Appeal held that once the
rules of natural justice have been breached by an arbitrator, the courts had little
discretion but to set aside the award unless the breach was immaterial.
The right to be heard, being one of the two constituent principles of the rules of natural
justice, has been most frequently considered by the courts in the context of applications to
set aside awards. In this particular context, the courts have adopted a minimal
interventionist approach, as expressed in Sabah Medical Center supra.
In accordance with this minimal interventionist approach, the courts have emphasized
that:
(1) section 20 only requires a fair and reasonable opportunity to be heard;
(2) any breach of the rules of natural justice must be shown to have prejudiced a party;
and
(3) if there is a breach of natural justice, the arbitral tribunal may be given an
opportunity to resume the arbitral proceedings and cure the breach.
This can be seen from the judgments in Sabah Medical Center, MMC Engineering, Tridant
Engineering and Garden Bay supra.
It is submitted that the minimal interventionist approach adopted by the courts in this
context may not be wholly appropriate, given that the rules of natural justice are of
fundamental importance. Specifically, although section 20 requires a fair and reasonable
opportunity to be heard, as opposed to a full opportunity, this should not be regarded as a
lower standard. Instead, the words ‘fair and reasonable’ in section 20 should be read as
being intended to prevent dilatory tactics. (4)
Further, the arbitral tribunal’s discretion to determine procedure under section 21(2)
should be read subject to section 20 and not vice versa, as expressly provided in section
21(2).
And, finally, given the fundamental importance of the rules of natural justice, and the plain
meaning of sections 37(1)(b)(ii) and 37(2)(b), any breach of the rules of natural justice should
result in an award being set aside. The breach of the rules of natural justice would colour
the entire arbitral proceedings and the award in an implicit manner. To require proof of
P 165 actual prejudice, as in MMC Engineering and Tanjung Langsat supra, appears to be putting
P 166 the threshold too high. And, to expect an arbitral tribunal, that has breached the rules of
natural justice, to resume the proceedings and cure such a breach may be unduly
optimistic.
Despite the judgments of the High Court, in Sabah Medical Center, MMC Engineering and
Tanjung Langsat supra, the fundamental importance of the rules of natural justice appears
to have been recognized by the Court of Appeal, in Tridant Engineering and Pancaran Prima
supra. The judgment of the Court of Appeal, in Pancaran Prima supra, recognizes that once
there is a breach of the rules of natural justice, the courts have little discretion but to set
aside an award unless the breach is immaterial. This is a departure from the earlier
approach of the courts that was strictly minimalist.
Apart from this, there does not appear to be any basis for advancing a distinction between
the test for a breach of the rules of natural justice in domestic and international
arbitration, as suggested in Infineon Technologies supra. Instead, the test in both domestic
and international arbitration should be a breach of the most basic notions of justice and
morality, as explained in Tan Kong Han supra.

§20.04 COMPREHENSIVE
Section 20 of the Arbitration Act 2005 applies to every stage of the arbitration. The
provision is not limited (5) to the conduct of the arbitral proceedings, although it appears
in Chapter 5 of the Act.
This unfortunately does not appear to have been recognized by the High Court, (6) in Sebiro
Holdings Sdn Bhd v. Bhag Singh & Anor [2014] 11 MLJ 761 at paragraph 16, where section 20
appears to have been limited in its application to the conduct of the arbitral proceedings.
P 166
P 167

21. Determination of Rules of Procedure

(1) Subject to the provisions of this Act, the parties are free to agree on the procedure to be
followed by the arbitral tribunal in conducting the proceedings.
(2) Where the parties fail to agree under subsection (1), the arbitral tribunal may, subject to
the provisions of this Act, conduct the arbitration in such manner as it considers
appropriate.
(3) The power conferred upon the arbitral tribunal under subsection (2) shall include the
power to –
(a) determine the admissibility, relevance, materiality and weight of any evidence;
(b) draw on its own knowledge and expertise;

100
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (c) order the provision of further particulars in a statement of claim or statement of
defence;
(d) order the giving of security for costs;
(e) fix and amend time limits within which various steps in the arbitral proceedings
must be completed;
(f) order the discovery and production of documents or materials within the
possession or power of a party;
(g) order the interrogatories to be answered;
(h) order that any evidence be given on oath or affirmation; and
(i) make such other orders as the arbitral tribunal considers appropriate.

§21.01 INTRODUCTION
Section 21 of the Arbitration Act 2005 provides for the determination of the procedure to
be adopted in the arbitral proceedings.
Section 21 of the Arbitration Act 2005 is based on Article 19 of the 1985 Model Law. In this
regard, sections 21(1) and 21(2) of the Arbitration Act 2005 reflect Article 19(1) and the first
sentence of Article 19(2) of the 1985 Model Law. Section 21(3)(a) of the Arbitration Act 2005
in turn reflects the second sentence of Article 19(2) but goes on to provide eight more
examples of the powers conferred on the arbitral tribunal.

§21.02 PARTY AUTONOMY

Section 21(1) of the Arbitration Act 2005 allows the parties the freedom to agree on the
rules of procedure to be adopted in the arbitration.
The parties are accordingly free to agree:
(1) on a bespoke set of rules for the conduct of the arbitration;
(2) that the arbitration be conducted as an ad hoc arbitration;
P 167
P 168
(3) to adopt any published rules of arbitration, like the ICC Rules of Arbitration or the
AIAC Arbitration Rules, which is specifically allowed by section 2(c) of the Arbitration
Act 2005; or
(4) to adopt the rules of civil procedure or evidence of a particular country. In this
context, these rules would apply as the rules of arbitration by virtue of the agreement
between the parties and not because they are the applicable rules of civil procedure
in the seat of arbitration.
In practice most arbitrations in Malaysia are either ad hoc or institutional. The High Court,
in Infineon Technologies (M) Sdn Bhd v. Orisoft Technology Sdn Bhd (previously known as
Orisoft Technology Bhd) and another application [2011] 7 MLJ 539 at paragraph 61,
recognized that institutional arbitration is less flexible than ad hoc arbitration, as
institutional arbitration is governed by the rules of the particular arbitration institution.
However, the High Court decided that such rules are facilitative and do not, generally,
deprive the parties of autonomy or prevent the arbitral tribunal being the master of
procedure subject to these rules.
Although the parties are free to agree on the rules of procedure, as recognized in Infineon
Technologies supra at paragraph 62, this freedom is not absolute. The parties’ freedom to
agree on procedure is subject to the mandatory provisions of the Arbitration Act 2005.
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
Democratic Republic [2017] 9 CLJ 273 at paragraph 161, further explained that the parties’
agreement on institutional rules would not override the mandatory provisions of the law of
the seat but would override the non-mandatory provisions:
Where the procedure chosen is different to that of the law of the seat of the
arbitration then the procedure chosen will override the non-mandatory
provisions of the seat of the arbitration. However, a choice of procedure by the
parties cannot override the mandatory provisions of at the seat of arbitration …
.
The most important of such mandatory provisions is section 20, which has been considered
above. The other mandatory provisions of the Arbitration Act 2005 include:
(1) section 25(1) on the exchange of the statement of claim and defence, which is a
corollary of the right to be heard under section 20;
(2) sections 26(3)-(5) on the need for notice of hearings and communication of documents
to all concerned parties, which are again related to the equal treatment of parties
and the right to be heard under section 20;
(3) section 29 on the assistance of court in taking evidence, which is to ensure the rights
granted under section 20 are enforceable;
(4) section 32(2) on the form and content of an award pursuant to a settlement;

101
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (5) sections 33(1), (2), (4) and (5) on the form and content of an award;
(6) section 34 on the termination of arbitral proceedings; and
(7) sections 35(1)-(3) on the correction and interpretation of the award.
P 168
P 169
As can be seen from the above, all the mandatory provisions of the Arbitration Act 2005
that limit the freedom of the parties to agree on the rules of procedure relate to either the
right to be heard or the arbitral award. The justification for the former is not hard to find as
it is a fundamental principle of the rules of natural justice. The mandatory provisions with
regards to the arbitral award on the other hand are to ensure the enforceability of the
award in accordance with the New York Convention.
Another potential limit on the parties’ freedom to agree on procedure is time. Here, it can
be argued that the parties must agree on the procedure at the initial stages of the
arbitration and should not be allowed to change this procedure at a later stage, as the
arbitral tribunal may not have agreed to sit if they had been aware of such procedure at
the outset. However, it is submitted that such an argument would be ill-conceived, as the
freedom of the parties to agree on procedure is for their benefit and not for the benefit of
the arbitral tribunal, who are, in any event, free to withdraw at any stage. It is therefore
submitted that there should be no limitation of time on the parties’ freedom to agree on
procedure. (7)

§21.03 ARBITRAL TRIBUNAL’S DISCRETION

Sections 21(1) and (2) of the Arbitration Act 2005 follow the familiar ‘two-level system’ in
the 1985 Model Law. First, section 21(1) gives the parties the freedom to agree, and, second,
section 21(2) provides for what happens in the absence of agreement between the parties
on procedure. Here, the default provision in section 21(2) is not specific but instead allows
the arbitral tribunal a broad discretion in determining the rules of procedure.
The breadth of this discretion has been recognized by the High Court, in Sabah Medical
Center Sdn Bhd v. Syarikat Neptune Enterprise Sdn Bhd [2011] 1 LNS 849 at page 19, where it
was held that ‘the arbitral tribunal is given full discretion to determine the manner in
which the proceeding is to be conducted.’
This wide discretion enables the arbitral tribunal to fashion an arbitration procedure best
suited to the parties. For example, where both parties are from a common law system, the
arbitral tribunal may direct disclosure, witness statements and cross-examination in
keeping with an adversarial system. On the other hand, if both parties are from a civil law
system, the arbitral tribunal may adopt a more inquisitorial system. And, if one party is
from a common law system and the other from a civil law system, the arbitral tribunal may
adopt a hybrid procedure in accordance with the international setting of the arbitration.
The wide discretion given to the arbitral tribunal is, however, not without limit. The
discretion is subject to the provisions of the Arbitration Act 2005. Again, the most
significant limitation on the discretion would be section 20. Apart from this, the arbitral
tribunal’s discretion in terms of procedure may also be limited by sections 25(3), 26 and 27.
P 169
P 170

§21.04 EXAMPLES OF THE ARBITRAL TRIBUNAL’S POWER

Section 21(3) of the Arbitration Act 2005 gives nine specific examples of the exercise of the
arbitral tribunal’s discretion pursuant to the broad discretion granted under section 21(2).
Section 21(3)(b) in particular has been considered by the Court of Appeal, (8) in Ajwa for
Food Industries Co (MIGOP), Egypt v. Pacific Inter-Link Sdn Bhd & Another Appeal [2013] 2 CLJ
395 at paragraph 40, where it was recognized that the arbitral tribunal was entitled to draw
on its own knowledge, especially in a trade arbitration, such as a palm oil commodities
arbitration:
An arbitration tribunal is empowered to draw from its own knowledge and
expertise in its determination especially when the arbitration is conducted by a
specialised trade body with knowledge and expertise in the palm oil trade, as
in the present case. Section 21(3)(b) of the Arbitration Act 2005 states that the
power conferred upon the arbitration panel includes the power to ‘draw on its
own knowledge and expertise’ which is what the PORAM Arbitration Tribunal did
in determining the measure and quantum of damages in the present case.
P 170
P 171

22. Seat of Arbitration

(1) The parties are free to agree on the seat of arbitration.
(2) Where the parties fail to agree under subsection (1), the seat of arbitration shall be
determined by the arbitral tribunal having regard to the circumstances of the case,
including the convenience of the parties.
(3) Notwithstanding subsections (1) and (2), the arbitral tribunal may, unless otherwise

102
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 agreed by the parties, meet at any place it considers appropriate for consultation
among its members, for hearing witnesses, experts or the parties, or for inspection of
goods, other property or documents.

§22.01 INTRODUCTION
Section 22 of the Arbitration Act 2005 provides for the determination of the place of
arbitration.
Section 22 of the Arbitration Act 2005 reflects Article 20 of the 1985 Model Law save that the
words ‘seat of arbitration’ is used in the Arbitration Act 2005 as opposed to ‘place of
arbitration’ in the 1985 Model Law.
Article 20 of the 1985 Model Law is in turn based on Article 16 of the 1976 UNCITRAL
Arbitration Rules, which provides:
Place of Arbitration
Article 16
1. Unless the parties have agreed upon the place where the arbitration is to
be held, such place shall be determined by the arbitral tribunal, having
regard to the circumstances of the arbitration.
2. The arbitral tribunal may determine the locale of the arbitration within
the country agreed by the parties. It may hear witnesses and hold
meetings for consultation among its members at any place it deems
appropriate, having regard to the circumstances of the arbitration.
3. The arbitral tribunal may meet at any place it deems appropriate for the
inspection of goods, other property or documents. The parties shall be
given sufficient notice to enable them to be present at such inspection.
4. The award shall be made at the place of arbitration.
Article 15 of the 1976 UNCITRAL Arbitration Rules has remained substantially the same in
the 2013 UNCITRAL Arbitration Rules, where Article 18 provides:
Place of Arbitration
Article 18
1. If the parties have not previously agreed on the place of arbitration, the
place of arbitration shall be determined by the arbitral tribunal having
regard to the circumstances of the case. The award shall be deemed to
have been made at the place of arbitration.
2. The arbitral tribunal may meet at any location it considers appropriate for
deliberations. Unless otherwise agreed by the parties, the arbitral
tribunal may also meet at any location it considers appropriate for any
other purpose, including hearings.
P 171
P 172
The 2010 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules.

§22.02 PARTY AUTONOMY

In keeping with the general framework of the 1985 Model Law, parties are given the
freedom to agree on the seat of arbitration under section 22(1) of the Arbitration Act 2005.
In this context, it should be borne in mind that the ‘seat of arbitration’ agreed upon by the
parties is in the abstract and need have no connection to the geographical location of
either party, the subject matter of the agreement or the likely place of the dispute.
As the seat of arbitration is abstract and may freely be agreed upon by the parties, the
question arises as to the grounds for choosing a particular seat. In this regard, a party
would consider the following important consequences when deciding the seat of
arbitration.
First, the seat of arbitration will determine the curial law or the procedural law applicable
to the arbitration. This is expressly provided for in sections 3(2) and (3), which state which
parts of the Arbitration Act 2005 will apply to domestic and international arbitration with a
seat in Malaysia. Similarly, in all Model Law jurisdictions, Article 1(2) of the 1985 Model Law
provides that the Model Law will apply if the place of arbitration is in the territory of the
State.
Second, and as a corollary, of the first consequence above, the award will be deemed to
have been made at the seat of arbitration under section 33(4) of the Arbitration Act 2005,
and an application to set aside the award will have to be made at the seat of arbitration.
Third, the choice of a seat of arbitration may make an otherwise domestic arbitration an
international arbitration. For example, if both Party A and Party B have their place of
business in State X but agree that the seat of arbitration will be State Y then, based on the
definition in section 2(1)(b)(i) of the Arbitration Act 2005, the arbitration is international.

103
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The first and second of these consequences have been recognized by the Court of Appeal,
in Sintrans Asia Services Pte Ltd v. Inai Kiara Sdn Bhd [2016] 5 CLJ 746 at paragraph 13:
The Arbitration Act 2005 in particular s. 22 defines the seat of arbitration. We
would hold that seat of arbitration is the juridical seat of the arbitration and it
is independent of the venue where hearings or other parts of the arbitral
process occurred. The seat prescribed the procedural law of the arbitration … .
…
It follows therefore that in challenges of this nature, the proper avenue for the
same to be ventilated would be in the courts of Singapore.

P 172 The Federal Court, in Thai-Lao Lignite supra at paragraphs 173 and 174, emphasized the first
P 173 of the consequences referred to above and explained that the choice of a seat meant
that the laws of the seat must be observed in relation to the arbitration insofar as those
laws were mandatory.

§22.03 ARBITRAL TRIBUNAL’S DISCRETION

Section 22 of the Arbitration Act 2005 follows the familiar ‘two-level system’ in the 1985
Model Law. If the parties do not, first, agree on the seat of arbitration, then, second, and in
default, the arbitral tribunal may determine the seat of arbitration.
The arbitral tribunal is to determine the seat of arbitration based on all the circumstances
of the case, with section 22(2) referring to the convenience of the parties in particular.

§22.04 ABSTRACTION
The abstract nature of the seat of arbitration is emphasized by section 22(3), which
provides that the arbitral tribunal may meet and hold hearings at a place other than the
seat of arbitration. Therefore even if State X is named as the seat of arbitration, all the
meetings and hearings may be held in State Y with neither the arbitral tribunal nor the
parties ever having set foot in State X, which nevertheless remains in abstract the seat of
the arbitration. All that appears to be required to comply with maintaining the seat of
arbitration is stating the seat as such in the award in accordance with section 33(4) of the
Arbitration Act 2005.
P 173
P 174

23. Commencement of Arbitral Proceedings

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular
dispute shall commence on the date on which a request in writing for that dispute to be
referred to arbitration is received by the respondent.

§23.01 INTRODUCTION
Section 23 of the Arbitration Act 2005 provides for the date of commencement of the
arbitral proceedings.
Section 23 of the Arbitration Act 2005 is the same as Article 21 of the 1985 Model Law save
that the words ‘shall’ and ‘in writing’ are not in the 1985 Model Law.
The inclusion of the word ‘shall’ in section 23 of the Arbitration Act 2005 does not change
the meaning of the original provision in the 1985 Model Law. The word ‘shall’ merely seems
to emphasize that the arbitration commences on the date of the request.
The inclusion of the words ‘in writing’ in section 23 of the Arbitration Act 2005 is a
departure from Article 21 of the 1985 Model Law. In this context, it is unclear whether the
1985 Model Law requires the request for arbitration to be in writing, as neither Article 21
nor the travaux preparatoires makes reference to such a requirement. It appears that the
requirement that the request for arbitration be writing has been included in section 23 of
the Arbitration Act 2005 to avoid the uncertainty found in the 1985 Model Law in this
regard.
Article 21 of the 1985 Model Law is modelled on Article 3 of the 1976 UNCITRAL Arbitration
Rules, which provides:
Notice of Arbitration
Article 3
1. The party initiating recourse to arbitration (hereinafter called the
‘claimant’) shall give to the other party (hereinafter called the
‘respondent’) a notice of arbitration.
2. Arbitral proceedings shall be deemed to commence on the date on which
the notice of arbitration is received by the respondent.
3. The notice of arbitration shall include the following:
(a) A demand that the dispute be referred to arbitration;

104
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) The names and addresses of the parties;
(c) A reference to the arbitration clause or the separate arbitration
agreement that is invoked;
(d) A reference to the contract out of or in relation to which the dispute
arises;
(e) The general nature of the claim and an indication of the amount
involved, if any;
(f) The relief or remedy sought;
(g) A proposal as to the number of arbitrators (i.e. one or three), if
parties have not previously agreed thereon.
4. The notice of arbitration may also include:
(a) The proposals for the appointments of a sole arbitrator and an
appointing authority referred to in article 6, paragraph 1;
(b) The notification of the appointment of an arbitrator referred to in
article 7;
(c) The statement of claim referred to in article 18.
P 174
P 175
Article 3 of the 1976 UNCITRAL Arbitration Rules is more detailed than Article 21 of the 1985
Model Law. This is in keeping with the purpose of the 1976 Arbitration Rules as a
comprehensive set of rules to govern ad hoc arbitration, on the one hand, and the purpose
of the 1985 Model Law, on the other hand, as a legal framework to be adopted by countries
to achieve uniformity and preserve the autonomy of parties.
Article 3 of the present 2013 UNCITRAL Arbitration Rules provides as follows:
Notice of Arbitration
Article 3
1. The party or parties initiating recourse to arbitration (hereinafter called
the ‘claimant’) shall communicate to the other party or parties
(hereinafter called the ‘respondent’) a notice of arbitration.
2. Arbitral proceedings shall be deemed to commence on the date on which
the notice of arbitration is received by the respondent.
3. The notice of arbitration shall include the following:
(a) A demand that the dispute be referred to arbitration;
(b) The names and contact details of the parties;
(c) Identification of the arbitration agreement that is invoked;
(d) Identification of any contract or other legal instrument out of or in
relation to which the dispute arises or, in the absence of such
contract or instrument, a brief description of the relevant
relationship;
(e) A brief description of the claim and an indication of the amount
involved, if any;
(f) The relief or remedy sought;
(g) A proposal as to the number of arbitrators, language and place of
arbitration, if the parties have not previously agreed thereon.
4. The notice of arbitration may also include:
(a) A proposal for the designation of an appointing authority referred to
in article 6, paragraph 1;
(b) A proposal for the appointment of a sole arbitrator referred to in
article 8, paragraph 1;
(c) Notification of the appointment of an arbitrator referred to in article
9 or 10.
5. The constitution of the arbitral tribunal shall not be hindered by any
controversy with respect to the sufficiency of the notice of arbitration,
which shall be finally resolved by the arbitral tribunal.
Article 3 of the 2013 UNCITRAL Arbitration Rules forms part of the 2018 AIAC Arbitration
Rules, which, in addition, provides under Rule 2:
Commencement of Arbitration
1. The Party or Parties initiating arbitration under the AIAC Arbitration Rules
shall submit a request in writing to commence arbitration (the
‘Commencement Request’) to the Director. The Commencement Request
shall be accompanied by the following:
(a) a copy of the written arbitration clause or a separate arbitration
agreement;

105
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) a copy of the contractual documentation in which the arbitration
clause is contained or in respect of which the arbitration arises;
(c) a copy of the notice of arbitration as described in Article 3
accompanied by a confirmation that it has been or is being served
on all other Parties by one or more means of service to be identified
in such confirmation; and
P 175
P 176
(d) a proof of payment of the non-refundable registration fee amounting
to USD795.00, or its equivalent in another currency, in international
arbitration and RM1,590.00 in domestic arbitration.
2. The date on which the Director has received the Commencement Request
with all accompanying documentation shall be treated as the date on
which the arbitration has commenced. The AIAC will notify the Parties of
the date of commencement of arbitration.

§23.02 PARTY AUTONOMY

Section 23 of the Arbitration Act 2005 follows the familiar ‘two-level system’ found
throughout the Act. The parties are first given the freedom to agree on the means for
ascertaining the date of commencement of the arbitration. Second, and failing such
agreement, the default provisions for ascertaining the date of commencement of the
arbitration will apply.
In practice, the parties exercise their freedom to concur in this context by agreeing to the
application of a set of rules published by an arbitration institute. These rules of arbitration
will invariably provide for the date of commencement of the arbitration, which will usually
require notice to both the other party and the arbitration institute.
For example, if the parties have agreed to the application of the 2018 AIAC Arbitration
Rules, then the notice of arbitration must be served on the other party to comply with
Article 3(2) of the 2013 UNCITRAL Arbitration Rules. In addition, a request to the Director of
the AIAC must also be submitted in accordance with Rule 2(1) of the 2018 AIAC Arbitration
Rules. In accordance with Rule 2(2) of the 2018 AIAC Arbitration Rules, the arbitration will
only commence once this request to the Director and the notice of arbitration have been
received by the Director.

§23.03 DEFAULT
In the event the parties do not agree on the means of ascertaining the date of
commencement of the arbitration, then the default provisions of section 23 of the
Arbitration Act 2005 will apply.
The default provision on the date of commencement of the arbitration is concise – it is the
date a request in writing for that dispute to be referred to arbitration is received by the
respondent.
Essentially, the request for arbitration must:
(1) be in writing;
(2) be received by the Respondent in accordance with section 6 of the Arbitration Act
2005; and
P 176
P 177
(3) ‘identify the particular dispute and make clear that arbitration is resorted to thereby
and not, for example, indicate merely the intention of later initiating arbitration
proceedings’. (9)
In addition to these three requirements, the request for arbitration must also comply with
section 30(3) of the Limitation Act 1953. This section provides that the request for
arbitration must require the respondent to:
(1) appoint an arbitrator;
(2) agree to the appointment of an arbitrator; or
(3) submit the dispute to the arbitrator designated in the arbitration agreement if the
arbitration agreement so designates an arbitrator.

§23.04 LIMITATION
Section 23 of the Arbitration Act 2005 is of particular significance because the
commencement of the arbitration by the request for arbitration effectively stops time from
running under the Limitation Act 1953.
In this context, section 30 of the Limitation Act 1953 provides:
30. Application of Act and other limitation enactments to arbitrations
(1) This Act and any other written law relating to the limitation of actions shall
apply to arbitrations as they apply to actions.

106
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (2) Notwithstanding any term in any submission to the effect that no cause of
action shall accrue in respect of any matter required by the submission to
be referred until an award is made under the submission, the cause of
action shall, for the purpose of this Act and of any other such written law
(whether in their application to arbitrations or to other proceedings), be
deemed to have accrued in respect of any such matter at the time when it
would have accrued but for that term in the submission.
(3) For the purpose of this Act and of any such written law as aforesaid, an
arbitration shall be deemed to be commenced when one party to the
arbitration serves on the other party or parties a notice requiring him or
them to appoint an arbitrator or to agree to the appointment of an
arbitrator, or, where the submission provides that the reference shall be
to a person named or designated in the submission, requiring him or them
to submit the dispute to the person so named or designated.
(4) Any such notice as aforesaid may be served either –
(a) by delivering it to the person on whom it is to be served; or
(b) by leaving it at the usual or last known place of abode in Malaysia of
that person; or
(c) by sending it by post in a registered letter addressed to that person
at his usual or last known place of abode in Malaysia,
as well as in any other manner provided in the submission; and
where a notice is sent by post in a manner prescribed by paragraph
P 177 (c) of this subsection, service thereof shall, unless the contrary is
P 178 proved, be deemed to have been effected at the time at which the
letter would have been delivered in the ordinary course of post.
(5) Where the High Court orders that an award be set aside or orders, after the
commencement of an arbitration, that the arbitration shall cease to have
effect with respect to the dispute referred, the Court may further order
that the period between the commencement of the arbitration and the
date of the order of the Court shall be excluded in computing the time
prescribed by this Act or any such written law as aforesaid for the
commencement of proceedings (including arbitration) with respect to the
dispute referred.
(6) This section shall apply to an arbitration under any written law as well as
to an arbitration pursuant to a submission, and subsections (3) and (4)
thereof shall have effect, in relation to an arbitration under any written
law, as if for the references to the submission there were substituted
references to such of the provisions of the law or of any order, scheme,
rules, regulations, or by-laws made there under as relate to the
arbitration.
(7) In this section the expressions ‘arbitration’, ‘award’ and ‘submission’ have
the same meanings as in the Arbitration Act 1952 [Act 93].
Although, section 30(7) of the Limitation Act 1953 specifically refers to the Arbitration Act
1952, the Limitation Act 1953 applies to the Arbitration Act 2005 by virtue of sections 35(1)
and (2) of the Interpretation Acts 1948 and 1967, which provide:
35. References to written laws
(1) A reference to a particular written law –
(a) is a reference to that law as amended or extended from time to time;
and
(b) includes a reference to any subsidiary legislation made thereunder.
(2) Where any written law or any provision of a written law is repealed and re-
enacted (with or without modification), references in any other written law
to the law or provision so repealed shall be construed as references to the
re-enacted law or provision.
This was confirmed by the High Court, in Dceil Imex Sdn Bhd v. Pembinaan Punca Cergas Sdn
Bhd [2014] 7 CLJ 552 at paragraph 58:
It follows from the foregoing that references in the Limitation Act 1953 to the
Arbitration Act 1952 continue to be applicable to the Arbitration Act 2005.
Accordingly it is submitted, and I would concur, that it is erroneous to conclude
that s. 30(5) is redundant under the provisions of the Arbitration Act 2005.
Section 30(1) of the Limitation Act 1953 essentially makes all limitation provisions equally
applicable to arbitration.
The most relevant limitation period is that applicable in contract. In this context, section
6(1)(a) of the Limitation Act 1953 provides:
6. Limitation of actions of contract and tort and certain other actions

107
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (1) Save as hereinafter provided the following actions shall not be brought
after the expiration of six years from the date on which the cause of action
accrued, that is to say –
(a) actions founded on a contract or on tort;

P 178 The Court of Appeal, in Malaysia Steel Works (KL) Sdn Bhd v. Kamseng Machine Works Pte
P 179 Ltd [2003] 4 CLJ 526 at page 532, recognized that by virtue of sections 6(1)(a) and 30(1) of
the Limitation Act 1953, the six-year limitation period applicable to a claim in contract
applied in an arbitration.
Section 30(2) of the Limitation Act 1953 effectively prevents parties from altering the start
date of the limitation period from the date the cause of action accrues to the date of the
award. Any agreement to this effect by the parties will be ineffective and the cause of
action will still accrue in accordance with the law and not in accordance with the
agreement of the parties.
Therefore, the start date for the limitation period cannot be altered by the arbitration
agreement. By way of contrast, however, the date to stop time from running for the
purposes of limitation can be agreed upon by the parties in the arbitration agreement
insofar as the parties are free to agree on the requirements for the request for arbitration.
Section 30(3) of the Limitation Act 1953 sets out certain requirements for the request for
arbitration. As discussed above, these requirements must be complied with in addition to
the default provisions in section 23 of the Arbitration Act 2005.
The High Court, in Penta-Ocean Construction Co Ltd v. Penang Development Corporation
[2003] MLJU 11 at page 155, recognized the need to comply with section 30(3) to stop time
from running for the purpose of limitation:
Furthermore, the plea of limitation applies to the commencement of the action,
which in the context of an arbitration, would be when one party serves on the
other a notice requiring him to appoint or agree to the appointment of an
Arbitrator (see Section 30(3) of the Limitation Act 1953).
Section 30(4) of the Limitation Act 1953 provides for the means for service of the request for
arbitration. Section 6 of the Arbitration Act 2005 also provides for the means of service of
written communications in general, which would include the request for arbitration.
Section 6 of the Arbitration Act 2005 insofar as it differs from section 30(4) of the Limitation
Act 1953 should prevail because the Arbitration Act 2005 is a specific legislation, as
opposed to the Limitation Act 1953, which is a general legislation. (10)
Section 30(5) of the Limitation Act 1953 provides that where the High Court orders that:
(1) an award be set aside, or
(2) the arbitration shall cease to have effect after the arbitration has commenced,
then the High Court may also order that the period between the commencement of the
arbitration and the order of the High Court be excluded for the purpose of limitation.
P 179 The High Court, in Dceil Imex supra at paragraph 62, decided that where the High Court had
P 180 decided on an appeal under section 18(8) of the Arbitration Act 2005 that the arbitral
tribunal does not have jurisdiction that effectively meant that the arbitration shall cease
to have effect. Therefore, the High Court would be entitled to exclude time under section
30(5) of the Limitation Act 1953.
Section 30(6) of the Limitation Act 1953 clarifies that section 30 will apply to both an
arbitration pursuant to an arbitration agreement and an arbitration pursuant to a written
law.
P 180
P 181

24. Language
(1) The parties are free to agree on the language to be used in the arbitral proceedings.
(2) Where the parties fail to agree under subsection (1), the arbitral tribunal shall determine
the language to be used in the arbitral proceedings.
(3) The agreement or the determination referred to in subsections (1) and (2) respectively
shall, unless otherwise specified in the agreement or determination, apply to any
written statement made by a party, any hearing and any award, decision or other
communication by the arbitral tribunal.
(4) The arbitral tribunal may order that any documentary evidence shall be accompanied
by a translation into the language agreed upon by the parties or determined by the
arbitral tribunal.

§24.01 INTRODUCTION
Section 24 of the Arbitration Act 2005 provides for the means for determining the language
of the arbitration.

108
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Section 24 of the Arbitration Act 2005 reflects Article 22 of the 1985 Model Law save for
certain minor changes in drafting. In particular, sections 24(1)-(3) of the Arbitration Act
2005 reflect Article 24(1) of the 1985 Model Law, and section 24(4) of the Arbitration Act
2005 reflects Article 24(2) of the 1985 Model Law.

§24.02 PARTY AUTONOMY

Section 24 of the Arbitration Act 2005 follows the familiar ‘two-level system’ of allowing the
parties to agree on the language first followed by default provisions for the arbitral
tribunal to determine the language.
Section 24(1) provides in clear terms that the parties are free to agree on the language of
the arbitration. This is of particular significance as it dispels any doubt that parties having
their seat of arbitration in Malaysia may be required to use the Malay language as the
language of the arbitration.
In deciding the language or languages to be used in the arbitration, the parties would need
(11) to consider:
(1) which language they would best be able to present their case in;
(2) whether more than one language should be used in the arbitration;
(3) if more than one language is to be used in the arbitration, the costs of translation
related to using multiple languages;
P 181 (4) costs that may be awarded in relation to the language used. Here, where the parties
P 182 have agreed to multiple languages, then the costs of translation are likely to be
regarded as the costs of the arbitration and awarded to the successful party. On the
other hand if a particular language is chosen and a party requires translation, he is
unlikely to entitled to recover these costs even if he is successful; and
(5) whether a suitable arbitrator may be selected in relation to the languages chosen.

§24.03 DEFAULT
In the absence of agreement between the parties, section 24(2) of the Arbitration Act 2005
provides that the arbitral tribunal may determine the language of the arbitration. Neither
the Arbitration Act 2005 nor the 1985 Model Law provides for the factors to be considered
by the arbitral tribunal in determining the language of arbitration.
It is submitted that the relevant factors to be considered by the arbitral tribunal in
determining the language of the arbitration would include:
(1) the language of the contract, including the arbitration agreement, between the
parties;
(2) the language of the correspondence and other business dealings between the parties;
(3) the languages habitually spoken by the parties;
(4) the need to ensure the equal treatment of the parties and their right to a fair and
reasonable opportunity to be heard in accordance with section 20 of the Arbitration
Act 2005;
(5) the translation cost of using multiple languages or a language other than the
language of the documents or which the parties habitually speak; and
(6) the language the members of the arbitral tribunal are themselves able to
understand.
The need to ensure the equal treatment of the parties and to allow them an opportunity to
be heard is of fundamental importance being part of the rules of natural justice. However,
this does not mean that the arbitral tribunal must always determine the language of the
arbitration in accordance with the languages habitually spoken by the parties. Where the
parties have consistently used a particular language in all their business dealings, the
arbitral tribunal would be justified in determining that such language shall be the
language of the arbitration, even if this is a language habitually spoken by one party but
not the other. The other party would then be free to use translation and would not be
deprived of an opportunity to be heard. (12)
P 182
P 183

§24.04 STATEMENTS, HEARING AND AWARD

Section 24(3) of the Arbitration Act 2005 clarifies that the language agreed upon between
the parties or determined by the arbitral tribunal will apply to all statements, the hearing
and the award.

§24.05 DOCUMENTS
Section 24(4) of the Arbitration Act 2005 gives the arbitral tribunal the discretion as to
whether to order the translation of documentary evidence. Documentary evidence can be
voluminous, and the arbitral tribunal is not obliged to order the translation of all
documents. Instead, the tribunal may order the translation of certain limited documents
that are relevant to the arbitration. (13)
P 183

109
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 183
P 184

25. Statements of Claim and Defence

(1) Within the period of time agreed by the parties or, failing such agreement, as
determined by the arbitral tribunal, the claimant shall state –
(a) the facts supporting his claim;
(b) the points at issue; and
(c) the relief or remedy sought,
and the respondent shall state his defence in respect of the particulars set out in
this subsection, unless the parties have otherwise agreed to the required elements
of such statements.
(2) The parties may –
(a) submit with their statements any document the parties consider relevant; or
(b) add a reference to the documents or other evidence that the parties may submit.
(3) Unless otherwise agreed by the parties, either party may amend or supplement the
claim or defence during the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow such amendment having regard to the delay
in making it.

§25.01 INTRODUCTION
Section 25 of the Arbitration Act 2005 provides for the Statement of Claim and Defence to
be delivered in the arbitration proceedings.
Section 25 of the Arbitration Act 2005 reflects Article 23 of the 1985 Model Law with changes
only made in terms of drafting. In particular sections 25(1) and (2) of the Arbitration Act
2005 reflect Article 23(1) of the 1985 Model Law, and section 25(3) of the Arbitration Act 2005
reflects Article 23(2) of the 1985 Model Law.
Article 23 of the 1985 Model Law is in turn based on Articles 18-20 of the 1976 UNCITRAL
Arbitration Rules, which provides:
Statement of Claim
Article 18
1. Unless the statement of claim was contained in the notice of arbitration,
within a period of time to be determined by the arbitral tribunal, the
claimant shall communicate his statement of claim in writing to the
respondent and to each of the arbitrators. A copy of the contract, and of
the arbitration agreement if not contained in the contract, shall be
annexed thereto.
2. The statement of claim shall include the following particulars:
(a) The names and addresses of the parties;
(b) A statement of the facts supporting the claim;
(c) The points at issue;
(d) The relief or remedy sought.
The claimant may annex to his statement of claim all documents he
deems relevant or may add a reference to the documents or other
evidence he will submit.
P 184
P 185
Statement of Defence
Article 19
1. Within a period of time to be determined by the arbitral tribunal, the
respondent shall communicate his statement of defence in writing to the
claimant and to each of the arbitrators.
2. The statement of defence shall reply to the particulars (b), (c) and (d) of
the statement of claim (article 18, para. 2). The respondent may annex to
his statement the documents on which he relies for his defence or may
add a reference to the documents or other evidence he will submit.
3. In his statement of defence, or at a later stage in the arbitral proceedings
if the arbitral tribunal decides that the delay was justified under the
circumstances, the respondent may make a counter-claim arising out of
the same contract or rely on a claim arising out of the same contract for
the purpose of a set-off.
4. The provisions of article 18, paragraph 2, shall apply to a counter-claim
and a claim relied on for the purpose of a set-off.
Amendment to the Claim or Defence

110
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Article 20
During the course of the arbitral proceedings either party may amend or
supplement his claim or defence unless the arbitral tribunal considers it
inappropriate to allow such amendment having regard to the delay in making it
or prejudice to the other party or any other circumstances. However, a claim
may not be amended in such a manner that the amended claim falls outside
the scope of the arbitration clause or separate arbitration agreement.
These provisions have since been revised in the 2013 UNCITRAL Arbitration Rules, which
provide under Articles 20-22 as follows:
Statement of claim
Article 20
1. The claimant shall communicate its statement of claim in writing to the
respondent and to each of the arbitrators within a period of time to be
determined by the arbitral tribunal. The claimant may elect to treat its
notice of arbitration referred to in article 3 as a statement of claim,
provided that the notice of arbitration also complies with the
requirements of paragraphs 2 to 4 of this article.
2. The statement of claim shall include the following particulars:
(a) The names and contact details of the parties;
(b) A statement of the facts supporting the claim;
(c) The points at issue;
(d) The relief or remedy sought;
(e) The legal grounds or arguments supporting the claim.
3. A copy of any contract or other legal instrument out of or in relation to
which the dispute arises and of the arbitration agreement shall be
annexed to the statement of claim.
4. The statement of claim should, as far as possible, be accompanied by all
documents and other evidence relied upon by the claimant, or contain
references to them.
Statement of defence
Article 21
1. The respondent shall communicate its statement of defence in writing to
the claimant and to each of the arbitrators within a period of time to be
determined by the arbitral tribunal. The respondent may elect to treat its
P 185 response to the notice of arbitration referred to in article 4 as a statement
P 186 of defence, provided that the response to the notice of arbitration also
complies with the requirements of paragraph 2 of this article.
2. The statement of defence shall reply to the particulars (b) to (e) of the
statement of claim (art. 20, para. 2). The statement of defence should, as
far as possible, be accompanied by all documents and other evidence
relied upon by the respondent, or contain references to them.
3. In its statement of defence, or at a later stage in the arbitral proceedings
if the arbitral tribunal decides that the delay was justified under the
circumstances, the respondent may make a counterclaim or rely on a
claim for the purpose of a set-off provided that the arbitral tribunal has
jurisdiction over it.
4. The provisions of article 20, paragraphs 2 to 4, shall apply to a
counterclaim, a claim under article 4, paragraph 2(f), and a claim relied
on for the purpose of a set-off.
Amendments to the claim or defence
Article 22
During the course of the arbitral proceedings, a party may amend or
supplement its claim or defence, including a counterclaim or a claim for the
purpose of a set-off, unless the arbitral tribunal considers it inappropriate to
allow such amendment or supplement having regard to the delay in making it or
prejudice to other parties or any other circumstances. However, a claim or
defence, including a counterclaim or a claim for the purpose of a set-off, may
not be amended or supplemented in such a manner that the amended or
supplemented claim or defence falls outside the jurisdiction of the arbitral
tribunal.
The 2013 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules, which in
addition provides under Rule 3:
Notifications

111
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 All documents served on the other Party pursuant to Articles 3, 4, 20, 21, 22, 23
and 24 shall be served on the Director at the same time or immediately
thereafter.
The provisions of the Arbitration Act 2005, and the 1985 Model Law it is based on, are more
general than the provisions of the UNCITRAL Arbitration Rules in this regard. In particular,
the provisions in the UNCITRAL Arbitration Rules list out specifically the content to be
included in the Statement of Claim in greater detail than the 1985 Model Law. This is
because the two have a different role to play, with the 1985 Model Law intended to be a
model for universal acceptance as an arbitration statute, while the UNCITRAL Arbitration
Rules are intended as the procedural rules for an ad hoc arbitration.
The development of the UNCITRAL Arbitration Rules between 1976 and 2010 also shows a
shift towards annexing documents to the pleadings that are delivered. In this context,
Article 20(3) of the 2010 UNCITRAL Arbitration Rule requires the contract and the
arbitration agreement to be annexed to the Statement of Claim. Article 20(4) further
requires that, as far as possible, all documents are to be delivered together with the
Statement of Claim or are to be referred to in such a claim.
P 186
P 187

§25.02 PARTY AUTONOMY

At first glance, section 25(1) of the Arbitration Act 2005 appears to depart from the familiar
‘two-level system’. This is because, by the use of the imperative ‘shall’, there is the
suggestion that the requirement to deliver a Statement of Claim and Defence in the
manner envisaged by the Arbitration Act 2005 is mandatory.
This gives rise to concern, as the rules published by various arbitration institutes have
requirements with regards to pleadings that differ from section 25(1). For example, the
provisions of the 2018 AIAC Arbitration Rules, which are considered above, are
considerably more detailed in this regard.
This concern is intended to be resolved by the use of the words ‘unless the parties have
otherwise agreed to the required elements of such statements’ at the end of section 25(1).
The balance sought to be achieved is between, on the one hand, requiring the parties to
deliver statements to ensure that the rules of natural justice as to equal treatment and an
opportunity to be heard are complied with and, on the other hand, the need to allow the
parties autonomy, especially the freedom to agree on the applicable arbitration rules.
This is recognized in the UNCITRAL Report at paragraph 196:
The Commission was agreed that paragraph (1) expressed a basic principle of
arbitral procedure from which the parties should not be able to derogate but
that the specific rules of procedure in respect of the statements of claim and
defence should be subject to the agreement of the parties. It was pointed out
that the procedure provided in paragraph (1) was not entirely consistent with
the procedure in some institutional arbitration rules. The Commission decided
to express the distinction between the mandatory nature of the principle
expressed in paragraph (1) and the non-mandatory nature of the procedural
rules by adding to the end of the first sentence words along the lines of ‘unless
the parties have otherwise agreed on the contents and form of such statements’.
Therefore, it is mandatory in principle under section 25(1) that a Statement of Claim and
Defence be delivered, but the procedure is not mandatory and may be agreed upon
between the parties.

§25.03 WRITING
Although in practice the pleadings are always in writing, this is not expressly required by
section 25(1) of the Arbitration Act 2005. The UNCITRAL has expressly stated (14) that the
pleadings need not be in writing and that the 1985 Model Law was amended to reflect this.
P 187
P 188

§25.04 DOCUMENTS
Section 25(2) of the Arbitration Act 2005 leaves it to the parties’ discretion whether to
include the documents or a reference to such documents in the pleadings.
This discretion, however, may not be an absolute one, as the arbitral tribunal would be
entitled to order the parties to disclose the documents they rely on together with their
pleadings in accordance with section 21(f) of the Arbitration Act 2005.
Furthermore, as discussed under §25.01 supra, where the 2018 AIAC Arbitration Rules have
been agreed to, the claimant would be obliged to annex the contract and the arbitration
agreement to the Statement of Claim and the parties will be obliged as far as possible to
include all documents they rely on or at least make reference to them.

112
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 §25.05 AMENDMENTS
Section 25(3) of the Arbitration Act 2005 allows the parties to amend or supplement their
pleadings unless agreed upon otherwise.
The principal factor to be considered by the arbitral tribunal is delay. In this context, it is
important to note that Article 23(2) of the 1985 Model Law, on which section 25(3) of the
Arbitration Act 2005 is based, intentionally does not have prejudice as a further factor to
be considered, as it was thought this would unduly restrict the ability of a party to clarify
his pleadings. (15)
Although not expressly stated in section 25(3), any amendment to the pleadings must not
introduce issues that are outside the scope of the arbitration agreement or the initial
reference to arbitration, as these issues would be outside the scope of the arbitral
tribunal.
Another important feature of section 25(3) is the use of the words ‘amend or supplement’.
The use of these words disjunctively with the word ‘supplement’ used in addition to
‘amend’ suggests that section 25(3) may have a wider scope than amendments to pleadings
in civil proceedings. In addition to merely correcting their pleadings, a party may be
entitled to add to their pleadings under section 25(3) provided that such an addition is not
outside the scope of the arbitration agreement or the initial reference to arbitration.
The distinction between pleadings in civil and arbitral proceedings was recognized by the
Court of Appeal, in Tridant Engineering (M) Sdn Bhd v. Ssangyong Engineering and
Construction Co Ltd [2016] MLJU 599 at paragraphs 29 and 30. The Court of Appeal
emphasized the need for greater flexibility in terms of pleadings in arbitral proceedings.
The principal issue was whether the rules of natural justice had been complied with insofar
as the opportunity to be heard had been given to both parties. So long as this was
satisfied, the fact that certain matters had not been specifically pleaded would not be
fatal to an award on such matters.
P 188
P 189

26. Hearings
(1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to
hold oral hearings for the presentation of evidence or oral arguments, or whether the
proceedings shall be conducted on the basis of documents and other materials.
(2) Unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall
upon the application of any party hold oral hearings at an appropriate stage of the
proceedings.
(3) The parties shall be given reasonable prior notice of any hearing and of any meeting of
the arbitral tribunal for the purposes of inspection of goods, other property or
documents.
(4) All statements, documents or other information supplied to the arbitral tribunal by one
party shall be communicated to the other party.
(5) Any expert report or evidentiary document on which the arbitral tribunal may rely in
making its decision shall be communicated to the parties.

§26.01 INTRODUCTION
Section 26 of the Arbitration Act 2005 provides for the conduct of hearings and seeks to
ensure the parties comply with the rules of natural justice in terms of the right to be heard
and the equal treatment of parties as set out in section 20.
Section 26 of the Arbitration Act 2005 is based on Article 24 of the 1985 Model Law save for
some stylistic changes, which are as follows:
(1) the words ‘subject to any contrary agreement by the parties’ at the start of Article
24(1) have been substituted by the words ‘Unless otherwise agreed by the parties’ at
the beginning of section 26(1);
(2) Article 24(1) has been split into sections 26(1) and (2);
(3) the word ‘However’, which appears at the beginning of the second sentence of Article
24(1), has been removed from the beginning of section 26(2);
(4) the words ‘sufficient advance notice’ in Article 24(2) have been substituted with
‘reasonable prior notice’ in section 26(3);
(5) Article 24(3) has been split into sections 26(4) and (5); and
(6) the word ‘Also’, which appears at the beginning of the second sentence of Article
24(3), is not found in section 26(5).
These changes do not appear to be of any significance save for the change made to section
26(3), which will be considered under §26.03 infra.
P 189 Article 24 of the 1985 Model Law is in turn based on provisions of the 1976 UNCITRAL
P 190 Arbitration Rules. In particular:
(1) Article 24(1) of the 1985 Model Law is based on Article 15(2) of the 1976 UNCITRAL

113
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Arbitration Rules;
(2) Article 24(2) of the 1985 Model Law is based on Article 25(1) of the 1976 UNCITRAL
Arbitration Rules; and
(3) Article 24(3) of the 1985 Model Law is based on Articles 15(3) and 27(1) of the 1976
Arbitration Rules.
In this regard, Articles 15(2) and (3), 25(1) and 27(1) of the 1976 UNCITRAL Arbitration Rules
provide:
General Provisions
Article 15
…
2. If either party so requests at any stage of the proceedings, the arbitral
tribunal shall hold hearings for the presentation of evidence by witnesses,
including expert witnesses, or for oral argument. In the absence of such a
request, the arbitral tribunal shall decide whether to hold such hearings or
whether the proceedings shall be conducted on the basis of documents
and other materials.
3. All documents or information supplied to the arbitral tribunal by one
party shall at the same time be communicated by that party to the other
party.
…
Evidence and Hearings
…
Article 25
1. In the event of an oral hearing, the arbitral tribunal shall give the parties
adequate advance notice of the date, time and place thereof.
Experts
Article 27
1. The arbitral tribunal may appoint one or more experts to report to it, in
writing, on specific issues to be determined by the tribunal. A copy of the
expert’s terms of reference, established by the arbitral tribunal, shall be
communicated to the parties.
The provisions of the 1976 UNCITRAL Arbitration Rules are now found in Articles 17(3) and
(4), 28(1) and 29(1) of the 2013 UNCITRAL Arbitration Rules, which provide:
General Provisions
Article 17
…
3. If at an appropriate stage of the proceedings any party so requests, the
arbitral tribunal shall hold hearings for the presentation of evidence by
witnesses, including expert witnesses, or for oral argument. In the absence
of such a request, the arbitral tribunal shall decide whether to hold such
hearings or whether the proceedings shall be conducted on the basis of
documents and other materials.
4. All communications to the arbitral tribunal by one party shall be
communicated by that party to all other parties. Such communications
shall be made at the same time, except as otherwise permitted by the
arbitral tribunal if it may do so under applicable law.
P 190
P 191
…
Hearings
Article 28
1. In the event of an oral hearing, the arbitral tribunal shall give the parties
adequate advance notice of the date, time and place thereof.
…
Experts appointed by the arbitral tribunal
Article 29
1. After consultation with the parties, the arbitral tribunal may appoint one
or more independent experts to report to it, in writing, on specific issues
to be determined by the arbitral tribunal. A copy of the expert’s terms of
reference, established by the arbitral tribunal, shall be communicated to

114
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the parties.
The 2013 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules.

§26.02 AUTONOMY AND THE IMPORTANCE OF AN ORAL HEARING

Sections 26(1) and (2) of the Arbitration Act 2005 provide for three distinct scenarios, which
are considered below. The first and second scenarios cover situations where the parties
have agreed on the modalities of the hearing and have thus exercised their autonomy. The
third scenario, which is far more common in practice, deals with a situation where the
parties have not reached an agreement on how the hearing is to be conducted.

[A] Where the Parties Have Agreed on an Oral Hearing

In this scenario, the arbitral tribunal will be required to hold an oral hearing in accordance
with the agreement of the parties.

[B] Where the Parties Have Agreed That No Hearing Will Be Held
In general, in this situation, the arbitral tribunal will not hold a hearing and determine the
issues based on the documents that are delivered.
However, even in this situation, in exceptional cases, where not to hold an oral hearing
may deprive a party of his right to a hearing under section 20 of the Arbitration Act 2005,
an oral hearing may be permitted.
This view is based on the UNCITRAL Report at paragraph 205, which reads:
As to the question whether an agreement by the parties that there would be no
oral hearings was also binding, different views were expressed. Under one view,
the right to oral hearings was of such fundamental importance that the parties
were not bound by their agreement and a party could always request oral
hearings. Under another view, the agreement of the parties that no oral hearings
would be held was binding on the parties but not on the arbitral tribunal so that
the arbitral tribunal, if requested by a party, had a discretion to order oral
hearings. However, the prevailing view was that an agreed exclusion of oral
P 191 hearings was binding on the parties and the arbitral tribunal. Nevertheless, it
P 192 was noted that article 19(3) [Article 18 of the final text of the 1985 Model Law],
requiring that each party should be given a full opportunity to present his case,
might in exceptional circumstances provide a compelling reason for holding an
oral hearing. It was understood that parties who had earlier agreed that no
hearings should be held were not precluded from later modifying their
agreement, and thus to allow a party to request oral hearings.
A similar position appears to be adopted in the 2018 AIAC Fast Track Arbitration Rules,
which provides for documents-only arbitration for certain disputes of a lower value but
allows the arbitral tribunal to hold a hearing if necessary after consultation with the
parties. In this context, Rule 16 of the 2018 AIAC Fast Track Arbitration Rules provides:
Rule 16
Documents-only Arbitration
1. Where the Parties have expressly agreed in writing to a documents-only
arbitration, the arbitral tribunal shall, upon receipt of the final written
submissions proceed and consider the dispute and publish the award
within the period of time set out in Rule 21(1)(g).
2. Where the aggregate amount of dispute is less than USD75,000.00, or its
equivalent in another currency, or is unlikely to exceed USD75,000.00, or
its equivalent in another currency, in an international arbitration; or is less
than RM150,000.00 or is unlikely to exceed RM150,000.00 in a domestic
arbitration, the arbitration shall proceed as a documents-only arbitration,
unless the arbitral tribunal deems it necessary to proceed by way of
substantive oral hearings upon consultation with the Parties.

[C] Where the Parties Have Not Agreed on Whether an Oral Hearing Is to Be Held
In this scenario, the arbitral tribunal has the discretion to decide whether to hold an oral
hearing or not. However, if either party insists on an oral hearing, the arbitral tribunal must
hold an oral hearing. This is clear from section 26(2) of the Arbitration Act 2005 and is
intended to safeguard a party’s right to be heard.
Generally, sections 26(1) and (2) of the Arbitration Act 2005 are a specific expression of the
general rule in section 20 that parties are to be treated equally and given an opportunity
to be heard.
Apart from this, the words ‘presentation of evidence or oral arguments’ are used in section
26(1) to cover all forms of presentation of evidence, including oral testimony and the
accompanying cross-examination, as well as oral arguments by counsel both on
P 192 substantive and procedural issues. (16)

115
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 192
P 193

§26.03 NOTICE
Section 26(3) of the Arbitration Act 2005 requires the parties to be given reasonable prior
notice of any hearing or meeting. This is again a specific expression of the general
principle set out in section 20 that the parties have a right to be heard and are to be
treated equally. The parties can only exercise their right to be heard if they have been
given reasonable prior notice.
Section 26(3) is intended as an expression of a broad principle and does not delve into
issues of procedure such as who is to notify the parties and the length of notice required.
The parties are free to agree on these matters subject to the important caveat that any
such agreement may be ineffective if it does not allow for reasonable prior notice. In this
regard, it is unclear why the words ‘sufficient advance notice’ in Article 24(2) have been
changed to ‘reasonable prior notice’ in section 26(3). However, the words appear to have
the same effect, with the word ‘reasonable’ perhaps further emphasizing an objective
standard that must comply with section 20 regardless of any agreement between the
parties. (17)

§26.04 COMMUNICATION
Section 26(4) of the Arbitration Act 2005 provides that any communication by a party with
the arbitral tribunal must also be communicated to the other party. Section 26(5) looks at
this from the point of view of the arbitral tribunal and provides that any expert report or
evidentiary document relied on by the arbitral tribunal must be communicated to both
parties.
Again, these are specific expressions of the general principle of equality and the right to be
heard found in section 20 of the Arbitration Act 2005. Unless a party is aware of what the
other party has communicated to the arbitral tribunal, he will not be in a position to
respond and exercise his right to be heard.
Similarly, unless the parties are made aware of the evidentiary material relied upon by
the arbitral tribunal, they will not be in a position to respond to such material. In this
regard, there is a limit though. The arbitral tribunal is only required to communicate
evidentiary material relied on and not other material, for example reference to
dictionaries and commentaries. (18)
P 193
P 194

27. Default of a Party

Unless otherwise agreed by the parties, if without showing sufficient cause –
(a) the claimant fails to communicate the statement of claim in accordance with
subsection 25(1), the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate the statement of defence in accordance with
subsection 25(1), the arbitral tribunal shall continue the proceedings without treating
such failure in itself as an admission of the claimant’s allegations;
(c) any party fails to appear at a hearing or to produce documentary evidence, the arbitral
tribunal may continue the proceedings and make the award on the evidence before it;
or
(d) the claimant fails to proceed with the claim, the arbitral tribunal may make an award
dismissing the claim or give directions, with or without conditions, for the speedy
determination of the claim.

§27.01 INTRODUCTION
Section 27 of the Arbitration Act 2005 provides for the manner in which the arbitral tribunal
is to proceed in the event of a default by the parties, such as failing to deliver their
pleadings, attend hearings or prosecute the claim.
Section 27 of the Arbitration Act 2005 reflects Article 25 of the 1985 Model Law save that
section 25(d) is a new provision that is not found in the 1985 Model Law.

§27.02 PARTY AUTONOMY

Section 27 of the Arbitration Act 2005 follows the familiar ‘two-level system’ adopted in the
1985 Model Law. The parties are, first, given the freedom to agree on the consequences of
default, failing which the default provisions in section 27 apply.
In practice, the parties would agree on the consequences of default by agreeing to
arbitration rules published by an institute. This is expressly permitted under section 2(c) of
the Arbitration Act 2005.
If the parties have agreed to the AIAC Arbitration Rules, the consequences of default are
similar to those provided for under section 27. In this regard, Article 30 of the 2013
UNCITRAL Arbitration Rules, which forms part of the 2018 AIAC Arbitration Rules, provides:

116
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Default
Article 30
1. If, within the period of time fixed by these Rules or the arbitral tribunal,
without showing sufficient cause:
(a) The claimant has failed to communicate its statement of claim, the
P 194 arbitral tribunal shall issue an order for the termination of the
P 195 arbitral proceedings, unless there are remaining matters that may
need to be decided and the arbitral tribunal considers it
appropriate to do so;
(b) The respondent has failed to communicate its response to the notice
of arbitration or its statement of defence, the arbitral tribunal shall
order that the proceedings continue, without treating such failure in
itself as an admission of the claimant’s allegations; the provisions of
this subparagraph also apply to a claimant’s failure to submit a
defence to a counterclaim or to a claim for the purpose of a set-off.
2. If a party, duly notified under these Rules, fails to appear at a hearing,
without showing sufficient cause for such failure, the arbitral tribunal may
proceed with the arbitration.
3. If a party, duly invited by the arbitral tribunal to produce documents,
exhibits or other evidence, fails to do so within the established period of
time, without showing sufficient cause for such failure, the arbitral tribunal
may make the award on the evidence before it.

§27.03 DEFAULT
Section 27 of the Arbitration Act 2005 provides for the consequences of default, where the
parties have not agreed on these matters. Section 27 provides for four scenarios, which are
considered below.

[A] Where the Claimant Fails to Deliver the Statement of Claim

Here, section 27 provides that the arbitral tribunal shall terminate the proceedings. The
use of the imperative ‘shall’ in section 27(a) suggests that the arbitral tribunal does not
have a discretion and must terminate the proceedings if the claimant fails to deliver the
Statement of Claim.
However, the Arbitration Act 2005 does not specify the consequences of such termination.
It is submitted (19) that, in general, the claimant would be entitled to recommence
arbitration proceedings subject to the relevant limitation period. Further, the claimant
would have to bear the costs of the arbitration proceedings that were terminated due to
his failure to deliver a Statement of Claim.

[B] Where the Respondent Fails to Deliver His Statement of Defence

Here, the arbitral tribunal shall continue with the arbitration proceedings without treating
such failure as an admission.
Section 27(b) of the Arbitration Act 2005 is of significance in this regard as it departs from
the rules applicable in civil proceedings, where a failure to file a Defence will generally be
treated as an admission that entitles the plaintiff to enter judgment against the defendant.
(20)
P 195
P 196
Section 27(b) like section 27(a) uses the word ‘shall’ to make clear that the arbitral tribunal
must proceed and not treat the failure to deliver the Statement of Defence as an
admission.
Although section 27(b) is drafted in mandatory terms, it is submitted that the arbitral
tribunal retains a discretion as to how to treat the failure to deliver a Statement of
Defence, although this cannot be treated as an admission. The arbitral tribunal is not
obliged to treat the failures to deliver a Statement of Defence as a complete denial of the
claim and would be entitled to draw such inferences as the facts present. (21)

[C] Where Any Party Fails to Attend the Hearing or Provide Documentary Evidence
Here, the arbitral tribunal may continue the proceedings and make the award based on
the evidence before it.
Unlike sections 27(a) and (b), section 27(c) of the Arbitration Act 2005 uses the permissive
‘may’ rather than the imperative ‘shall’. This makes it clear that the arbitral tribunal has a
discretion on how to proceed with the arbitration if any party fails to attend a hearing or to
provide documentary evidence.
The arbitral tribunal’s discretion includes the power not to admit or to disregard any
documentary evidence presented by a party after the time limit specified for producing
such documents. The arbitral tribunal also has the discretion to draw inferences from a

117
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 party’s failure to provide documentary evidence. (22)

[D] Where the Claimant Fails to Proceed with the Claim

Here, the arbitral tribunal may make an award dismissing the claim or give directions for
the speedy determination of the claim.
Section 25(d) of the Arbitration Act 2005 also uses the word ‘may’, which emphasizes that
the arbitral tribunal retains a discretion on how to proceed with the arbitration when the
claimant fails to present a claim.
In practice, the arbitral tribunal will exercise this discretion when the respondent applies
for the claim to be dismissed for want of prosecution.

§27.04 SAFEGUARDS
The default provisions in section 27 of the Arbitration Act 2005 have serious consequences
as they can result in the termination of the proceedings or in the award being made ex
parte.
Due to these serious consequences, and in particular, to ensure that any award made ex
P 196 parte will be enforced, section 27 has certain safeguards. These safeguards are both
P 197 express and implicit. Expressly, section 27 provides that all the default provisions will
apply only when the defaulting party is unable to show ‘sufficient cause’ for the failure.
After some initial debate, it is now clear that whether or not ‘sufficient cause’ has been
shown is a matter for the arbitral tribunal to decide rather than the courts. (23)
Implicitly, section 27 is subject to section 20 of the Arbitration Act 2005. Therefore,
sufficient notice must have been given before any of the default provisions can apply.
P 197
P 198

28. Expert Appointed by Arbitral Tribunal

(1) Unless otherwise agreed by the parties, the arbitral tribunal may –
(a) appoint one or more experts to report to it on specific issues to be determined by
the arbitral tribunal; or
(b) require a party to give the expert any relevant information or to produce or to
provide access to any relevant documents, goods or other property for the
expert’s inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal
considers it necessary, the expert shall, after delivery of a written or oral report,
participate in a hearing where the parties have the opportunity to put questions to the
expert and to present other expert witnesses in order to testify on the points at issue.

§28.01 INTRODUCTION
Section 28 of the Arbitration Act 2005 provides for the appointment of experts by the
arbitral tribunal. It is important to note that section 28 does not deal with the
appointment of experts by the parties.
Section 28 of the Arbitration Act 2005 reflects Article 26 of the 1985 Model Law.

§28.02 PARTY AUTONOMY

Section 28(1)(a) of the Arbitration Act 2005 is not mandatory. The parties are free to agree
on whether or not the arbitral tribunal may appoint an expert. The parties are free to agree
on this at any stage of the proceedings and are not obliged to agree on this either in the
arbitration agreement or at the initial stages of the arbitration. Therefore, if the arbitral
tribunal notifies the parties that the arbitral tribunal is considering appointing an expert,
the parties are free at that stage to notify the arbitral tribunal that they do not agree to
the appointment of an expert. The arbitral tribunal is then free to withdraw if they are of
the view that they do not have the expertise to continue with the proceedings. (24)
Section 28(1)(a) allows for this, in the light of the importance of party autonomy in
arbitration. The parties are assumed to have appointed an arbitral tribunal whom they
consider have the necessary expertise to determine the dispute. The parties may also
simply wish to have the dispute determined by the arbitral tribunal within their expertise
rather than by using an expert. Further, the parties may not wish to incur the additional
cost and delay likely to be occasioned by the appointment of an expert. (25)
P 198
P 199

§28.03 COOPERATION
Section 28(1)(b) of the Arbitration Act 2005 allows the arbitral tribunal to direct the parties
to provide evidence or access to evidence to the expert. It is important to note that these
directions are given by the arbitral tribunal and not by the expert to the parties. In the
event a party fails to comply with these directions, the arbitral tribunal may continue the

118
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 proceedings and make the award based on the evidence before them in accordance with
section 27(c) of the Arbitration Act 2005.

§28.04 RIGHT TO BE HEARD

Section 28(2) is another specific implementation of the general right to be heard and be
treated with equality set out in section 20 of the Arbitration Act 2005.
The specific implementation of this broad principle involves:
(1) the expert delivering his report to the parties;
(2) the parties being free to appoint their own experts;
(3) the tribunal-appointed expert appearing at a hearing at the request of a party; and
(4) the parties being entitled to challenge the tribunal-appointed expert at this hearing
and present the testimony of party-appointed experts.

§28.05 IMPARTIALITY AND INDEPENDENCE

Section 28 of the Arbitration Act 2005 does not expressly provide for the challenge of a
tribunal-appointed expert on the grounds of lack of impartiality or independence. As the
expert is appointed by the arbitral tribunal, it is submitted that a challenge may be made
by relying on section 14 of the Arbitration Act 2005 by way of analogy.
P 199
P 200

29. Court Assistance in Taking Evidence

(1) Any party may with the approval of the arbitral tribunal, apply to the High Court for
assistance in taking evidence.
(2) The High Court may order the attendance of a witness to give evidence or, where
applicable, produce documents on oath or affirmation before an officer of the High
Court or any other person, including the arbitral tribunal.

§29.01 INTRODUCTION
Section 29 of the Arbitration Act 2005 allows a party to apply to the High Court for
assistance in taking evidence and elaborates how such evidence may be obtained through
the High Court.
Section 29 of the Arbitration Act 2005 differs from Article 27, which is its corresponding
provision in the 1985 Model Law.
Article 27 of the 1985 Model Law provides:
Court assistance in taking evidence
The arbitral tribunal or a party with the approval of the arbitral tribunal may
request from a competent court of this State assistance in taking evidence. The
court may execute the request within its competence and according to its rules
on taking evidence.
First, the 1985 Model Law allows either the arbitral tribunal or the parties to approach the
courts for assistance. However, section 29(1) only provides for the parties to approach the
courts. This is perhaps due to concerns with Article 27, which by allowing the arbitral
tribunal to seek evidence appears contrary to the adversarial system familiar to parties in
Malaysia. (26) Furthermore, this provision in Article 29 is intended as a compromise
between those legal systems in which only the arbitral tribunal may request the court for
assistance and those legal systems in which the parties may make such a request. (27)
While there is a need for such a compromise in the 1985 Model Law, there is no need for
such a compromise in domestic legislation.
Second, the ‘competent court of this state’ in Article 27 of the 1985 Model Law has been
designated as the High Court in section 29(1) of the Arbitration Act 2005. This is in
conformity with the practice in the Arbitration Act 2005 of designating the High Court,
which is defined under section 2(1) of the Arbitration Act 2005, as the competent court.
Third, section 29(2) of the Arbitration Act 2005 provides details of how the High Court would
P 200 secure evidence, which details are not found in Article 27 of the 1985 Model Law. This
P 201 appears to be in accordance with the intention of Article 27 of the 1985 Model Law, which
allows for details to be included in the adopting legislation based on the civil procedure
rules applicable in the adopting State.

§29.02 APPLICATION
Section 29(1) of the Arbitration Act 2005 allows a party, with the approval of the arbitral
tribunal, to apply to the High Court for assistance in taking evidence. The approval of the
arbitral tribunal is required in order to prevent dilatory tactics by a party.
The need for such a provision arises from the arbitral tribunal’s own lack of power to

119
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 compel a person to provide evidence. Hence the need for a party to seek assistance from
the courts in taking evidence.
The question arises as to whether a party may apply to the High Court for assistance in
taking evidence in relation to an arbitration with a seat outside Malaysia. Due to section 3
of the Arbitration Act 2005, which limits the application of the Act to domestic and
international arbitration with a seat in Malaysia, section 29 of the Arbitration Act 2005 will
not apply to an arbitration with a seat outside Malaysia. This is in accordance with the
view taken during the drafting of the 1985 Model Law that court assistance in relation to a
foreign-seated arbitration fell within the domain of international cooperation between
States, which was best achieved by conventions or bilateral treaties, rather than by
domestic legislation. (28)

§29.03 ORDERS
The High Court may then order witnesses to provide evidence or produce documents in
accordance with section 29(2) of the Arbitration Act 2005.
The use of the word ‘may’ in section 29(2) emphasizes the High Court’s discretion in this
matter. Therefore, the applicant would need to pass two hurdles: first, the approval of the
arbitral tribunal and second, the discretion being exercised in their favour by the High
Court.
P 201

References
1) See Analytical Commentary, Article 19.
2) See UNCITRAL Report at para. 176.
3) The judgment of the High Court, in MMC Engineering supra, has since been affirmed by
the Court of Appeal.
4) See Analytical Commentary, Article 19, commentary 8.
5) See Analytical Commentary, Article 19, commentary 7.
6) The judgment of the High Court, in Sebiro Holdings supra, was affirmed by the Court of
Appeal, in Sebiro Holdings Sdn Bhd v. Bhag Singh & Anor [2015] 4 CLJ 209.
7) See UNCITRAL Report at para. 172.
8) An appeal against this judgment was dismissed on other grounds by the Federal Court
in [2013] 7 CLJ 18.
9) See Analytical Commentary, Article 21, commentary 2.
10) See House Buyer Tribunal & Anor v. Unique Creations Sdn Bhd and other appeals [2014] 3
MLJ 850 at para. 23, CA; Public Prosecutor v. Chew Siew Lan [1982] CLJ (Rep) 285 at pp
286-287, FC; Public Prosecutor v. Chu Beow Hin [1982] 1 MLJ 135 at p 137, FC; on the
general application of the principle of generalibus specialia derogant to the the
interpretation of statutes.
11) See Analytical Commentary, Article 22, commentary 2.
12) See Analytical Commentary, Article 22, commentary 4.
13) See Analytical Commentary, Article 22, commentary 5.
14) See UNCITRAL Report at para. 197.
15) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 5.096.
16) See Analytical Commentary, Article 24, commentary 5.
17) See Analytical Commentary, Article 24, commentaries 6 and 7.
18) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 5.113.
19) See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules, A Commentary
(2nd edn, Oxford University Press 2013) at p 675.
20) See Rules of Court 2012, Order 19 Rule 2 to 7.
21) See Analytical Commentary, Article 25, commentary 4; UNCITRAL Report para. 214.
22) See Analytical Commentary, Article 25, commentary 5.
23) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 5.120.
24) See Analytical Commentary, Article 26, commentary 2; UNCITRAL Report para. 219.
25) See Analytical Commentary, Article 26, commentary 2; UNCITRAL Report para. 219.
26) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 5.158.
27) See UNCITRAL Report at para. 226.
28) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 5.165.

120
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 6: Making of Award and Termination of
Publication Proceedings
Arbitration in Malaysia: A 30. Law Applicable to Substance of Dispute
Commentary on the
Malaysian Arbitration Act (1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are
chosen by the parties as applicable to the substance of the dispute.
(2) [this subsection has been deleted]
Jurisdiction (3) Any designation of the law or legal system of a given State shall be construed, unless
Malaysia otherwise expressed, as directly referring to the substantive law of that State and not to
its conflict of laws rules.
(4) Failing any designation by the parties, the arbitral tribunal shall apply the law
Bibliographic reference determined by the conflict of laws rules which it considers applicable.
(4A) The arbitral tribunal shall decide according to equity and conscience only if the parties
'Chapter 6: Making of Award have expressly authorized it to do so.
and Termination of
Proceedings', in (5) The arbitral tribunal shall, in all cases, decide in accordance with the terms of the
Thayananthan Baskaran , agreement and shall take into account the usages of the trade applicable to the
Arbitration in Malaysia: A transaction.
Commentary on the
Malaysian Arbitration Act, §30.01 INTRODUCTION
(© Kluwer Law International; Section 30 of the Arbitration Act 2005 provides for the law applicable to the substance of
Kluwer Law International the dispute both in situations where the parties have agreed on the law and in situations
2019) pp. 203 - 240 where the law has to be determined by the arbitral tribunal.
It is important to distinguish section 30 from section 21 of the Arbitration Act 2005. Section
30 provides for the determination of the substantive law, while section 21 provides for the
procedural law to be applied.
P 203
P 204
Section 30 of the Arbitration Act 2005 is based on Article 28 of the 1985 Model Law. In
particular:
(1) sections 30(1) and (3) are based on Article 28(1);
(2) section 30(4) is based on Article 28(2);
(3) section 30(4A) is based on Article 28(3); and
(4) section 30(5) is based on Article 28(4).
There are no significant differences between section 30 of the Arbitration Act 2005 and
Article 28 of the 1985 Model Law. Section 30(4A) uses the words ‘according to equity and
conscience’, which is a translation from Latin used in Article 28(3) of the 1985 Model Law –
‘ex aequo et bono or as amiable compositeur’. The words ‘in all cases’ have been moved
from the beginning of Article 28(4) to after the words ‘tribunal shall’ in section 30(5), and
the word ‘contract’ in Article 28(4) has been substituted with the word ‘agreement’ in
section 30(5). These appear to be merely changes in drafting.
Article 28 of the 1985 Model Law is in turn based on Article 33 of the 1976 UNCITRAL
Arbitration Rules, which provides:
Applicable law, amiable compositeur
Article 33
1. The arbitral tribunal shall apply the law designated by the parties as
applicable to the substance of the dispute. Failing such designation by the
parties, the arbitral tribunal shall apply the law determined by the
conflict of laws rules which it considers applicable.
2. The arbitral tribunal shall decide as amiable compositeur or ex aequo et
bono only if the parties have expressly authorized the arbitral tribunal to
do so and if the law applicable to the arbitral procedure permits such
arbitration.
3. In all cases, the arbitral tribunal shall decide in accordance with the
terms of the contract and shall take into account the usages of the trade
applicable to the transaction.
Article 28 of the 1985 Model Law and Article 33 of the 1976 UNCITRAL Arbitration Rules are
almost identical save that Article 28(1) uses the term ‘rules of law’ instead of ‘law’ as found
in Article 33(1).
Article 33 of the 1976 UNCITRAL Arbitration Rules was subsequently retained in Article 35 of
the 2013 UNCITRAL Arbitration Rules, which provides:
Applicable law, amiable compositeur

121
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Article 35
1. The arbitral tribunal shall apply the rules of law designated by the parties
as applicable to the substance of the dispute. Failing such designation by
the parties, the arbitral tribunal shall apply the law which it determines to
be appropriate.
2. The arbitral tribunal shall decide as amiable compositeur or ex aequo et
bono only if the parties have expressly authorized the arbitral tribunal to
do so.
3. In all cases, the arbitral tribunal shall decide in accordance with the
terms of the contract, if any, and shall take into account any usage of trade
applicable to the transaction.
P 204
P 205
Article 35(1) of the 2013 UNCITRAL Arbitration Rules and Article 28(1) of the 1985 Model Law
both use the term ‘rules of law’.
The 2013 UNCITRAL Arbitration Rules form part of the 2018 AIAC Arbitration Rules.
Section 30 of the Arbitration Act 2005 was amended by the Arbitration (Amendment) (No 2)
Act 2018 to reflect Article 28 of the Model Law more closely. Prior to this amendment,
section 30 provided as follows:
(1) Unless otherwise agreed by the parties, in respect of a domestic
arbitration where the seat of arbitration is in Malaysia, the arbitral
tribunal shall decide the dispute in accordance with the substantive law
of Malaysia.
(2) In respect of an international arbitration, the arbitral tribunal shall
decide the dispute in accordance with the law as agreed upon by the
parties as applicable to the substance of the dispute.
(3) Any designation by the parties of the law of a given State shall be
construed, unless otherwise expressed, as directly referring to the
substantive law of that State and not to its conflict of laws rules.
(4) Failing any agreement under subsection (2), the arbitral tribunal shall
apply the law determined by the conflict of laws rules.
(5) The arbitral tribunal shall, in all cases, decide in accordance with the
terms of the agreement and shall take into account the usages of the trade
applicable to the transaction.
There are significant differences between the old section 30, on the one hand, and the
current section 30, which reflects Article 28, on the other. These differences are as follows:
(1) the old section 30(1) is not found in the current section 30 or Article 28. This is
because the old section 30(1) provided for domestic arbitration, while the 1985 Model
Law provides for international arbitration. The current section 30 does not make a
distinction between domestic and international arbitration;
(2) the words ‘in respect of an international arbitration’ at the beginning of the old
section 30(2) are not found in the current section 30(1) or Article 28(1). These words
were included to distinguish the old section 30(2) from the old section 30(1), as the
former dealt with domestic arbitration, while the latter dealt with international
arbitration. As stated above, the current section 30 no longer distinguishes between
domestic and international arbitration;
(3) the term ‘law’ was used in the old section 30(2), as opposed to the term ‘rules of law’
used in the current section 30(1) and Article 28(1). This is of particular significance
and is considered under §30.03 infra;
(4) the words ‘agreed upon’ was used in the old section 30(2) instead of the word ‘chosen’
in the current section 30(1) and Article 28(1). This does not appear to be of any
significance and is a stylistic change;
(5) the words ‘by the parties’ in the old section 30(3) are not found in the current section
30(3) or Article 28(1). This also does not appear to be of significance and is simply an
alteration in drafting;
P 205
P 206
(6) the words ‘or legal system’ in Article 28(1) appearing after the words ‘the law’, which
were omitted from the old section 30(3), have now been included in the new section
30(3). This appears to be merely a matter of drafting;
(7) the words ‘agreement under subsection (2)’ in the old section 30(4) are substituted by
the words ‘designation by the parties’ in the current section 30(4) to reflect Article
28(2). This appears to be merely a change in drafting;
(8) the words ‘which it considers applicable’ at the end of Article 28(2), which were
omitted from the old section 30(4), have been included in the current section 30(4).
The significance of this is considered under §30.03 infra; and
(9) Article 28(3), which was omitted from the old section 30, has now been included in the
current section 30(4A). This is considered under §30.04 infra.

122
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Prior to the amendments in 2018, section 30(1) of the Arbitration Act 2005 was amended by
the Arbitration (Amendment) Act 2011. The words ‘unless otherwise agreed by the parties’
were added at the beginning of section 30(1). This amendment was to allow parties the
freedom to agree on the substantive law to be applied to a domestic arbitration with a
seat in Malaysia. This amendment in 2011 has now been superseded by the amendments in
2018, which have removed the distinction between domestic and international arbitration
in section 30.

§30.02 PARTY AUTONOMY

Sections 30(1) and (4) of the Arbitration Act 2005 utilize the familiar ‘two-level system’ in
relation to the determination of the substantive law in arbitration.
First, section 30(1) of the Arbitration Act 2005 allows the parties the freedom to choose the
substantive law applicable to the arbitration. This freedom is of significance as the parties
will not be bound to follow the substantive law at the seat of arbitration but are instead
free to agree on the substantive law to be applied.
Prior to the amendments in 2018, section 30(2) of the Arbitration Act 2005 did not go as far
as Article 28(1) of the 1985 Model Law. Article 28(1) allows the parties to agree on the ‘rules
of law’ applicable. The term ‘rules of law’ is wide enough to allow the parties to agree upon
their own self-drafted rules of law or a mixture of several states’ laws. (1)
Section 30(2) of the Arbitration Act 2005, prior to the amendments in 2018, used the term
‘law’ instead of ‘rules of law’. The previous use of the narrower term in section 30(2) meant
that the parties could only agree upon a closed body of law applicable in a particular
state. (2)
This divergence between the Arbitration Act 2005 and the 1985 Model Law has been
P 206 removed by the amendments in 2018. Section 30(1) now mirrors Article 28(1) and allows for
P 207 the parties to agree on ‘rules of law’, which would embrace the parties’ own self-drafted
rules of law or a mixture of several states’ laws. This strengthens party autonomy.
Section 30(3) of the Arbitration Act 2005 provides a useful rule of interpretation. (3) The
designation by the parties of a law of a given State will be interpreted as an agreement to
the substantive law of that State and not to the conflict of law rules applicable in that
State.

§30.03 DETERMINATION BY THE ARBITRAL TRIBUNAL

Second, if the parties have failed to agree upon the substantive law applicable, section
30(4) of the Arbitration Act 2005 provides that the arbitral tribunal shall determine the
substantive law in accordance with the conflict of law rules.
The High Court, in Innotec Asia Pacific Sdn Bhd v. Innotec GmbH [2007] 8 CLJ 304 at
paragraphs 21 and 22, explained the conflict of law rules that would be applied:
[21] In the absence of an agreement as to the substantive law applicable to an
arbitration, s. 30(4) of the Arbitration Act 2005 expressly provides the arbitral
tribunal the power to determine the law applicable in an arbitration by the
conflict of laws rules. Thus, it is necessary and reasonably implied that the
arbitrator and/or arbitral tribunal has the jurisdiction to decide on any dispute
as to the law applicable in such arbitration. (see: s. 30(4) Arbitration Act 2005;
and Commentary, The Arbitration Act 2005 UNCITRAL Model Law as applied in
Malaysia, para 30.6).
[22] In determining the applicable substantive law, the arbitral tribunal will
infer from the circumstances the system of law with which the transaction has
its closest and most real connection. (see: Compagnie d’Armement Maritime SA
v. Compagnie Tunisiennne de Navigation SA [1970] 3 All ER 712; and
Minousti Shipping Corp v. Trans Continental Shipping Services Pte Ltd [1971] 1 LNS
79; [1971] 2 MLJ 5; where it was held that the law where the arbitration was to be
held shall apply since the arbitration clause was silent as to what law should
govern such arbitration proceedings).
The words ‘which it considers applicable’ at the end of Article 28(2) of the 1985 Model Law
were not found in section 30(4) of the Arbitration Act 2005, prior to the amendments in
2018. This was unfortunate, as the former section 30(4) may have given the impression that
there is only one set of conflict of law rules that are applicable, when there are several, of
which one must be chosen as applicable by the arbitral tribunal. This unfortunate omission
was addressed by the amendments in 2018. The words ‘which it considers applicable’ have
now been included at the end of section 30(4), which mirrors Article 28(2).
Article 28(2) of the 1985 Model Law is more conservative than Article 28(1) in two respects.
P 207 First, the arbitral tribunal, unlike the parties, is only entitled to determine that a closed
P 208 body of law applicable in a State is the substantive law of the arbitration. (4) Second,
the arbitral tribunal must determine this applicable law in accordance with conflict of law
rules. This provision has been said to be too narrow and contradictory to international
arbitration practice, where the applicable substantive law is determined directly by the

123
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitral tribunal without the tribunal first determining the applicable conflict of law rules.
(5)
This has led to more than half of the adopting jurisdictions allowing the arbitral tribunal to
determine the substantive law without any restriction based on the applicable conflict of
law rules. (6) Article 25(1) of the 2013 UNCITRAL Arbitration Rules also allows the arbitral
tribunal to apply the substantive law, which it ‘determines to be appropriate’ without
restriction. The contrary view is that a higher degree of certainty is achieved by requiring
the arbitral tribunal to first determine the applicable conflict of law rules. However, this is
questionable as conflict of law rules differ between States. (7)

§30.04 EQUITY AND CONSCIENCE

Article 28(3) of the 1985 Model Law, which allows for disputes to be resolved ‘ex aequo et
bono’ or ‘amiable compositeur’, is reflected in section 30(4A) of the Arbitration Act 2005.
The terms ‘ex aequo et bono’ or ‘amiable compositeur’ in Latin, or ‘according to equity and
conscience’ in English, are not defined in the 1985 Model Law. Under these terms,
essentially, an arbitral tribunal may determine a dispute according to its own
understanding and not necessarily strictly in accordance with the law. (8)

§30.05 AGREEMENT AND TRADE USAGE

Section 30(5) of the Arbitration Act 2005 provides that ‘in all cases’, that is whether in
domestic or international arbitration and whether the law has been agreed upon by the
parties or determined by the arbitral tribunal, the arbitral tribunal shall determine the
dispute in accordance with the terms of the agreement and trade usage.
Section 30(5) has also been relied on to contend that parties are entitled to pre-award
interest. This is considered in detail under §33.09[B][2] infra. (9)
P 208
P 209

§30.06 THIRD-PARTY DETERMINATION

Article 2(d) of the 1985 Model Law provides that the parties may allow a third party,
including an institution, to determine issues the parties are entitled to determine.
However, Article 28 is expressly excluded from the application of Article 2(d); this is to
ensure that the parties may not agree to a third party determining the substantive law.
However, section 2(2)(b) of the Arbitration Act 2005, which is the equivalent of Article 2(d) of
the 1985 Model Law, does not expressly exclude section 30. This accordingly leaves open
the possibility that in an arbitration with a seat in Malaysia, the parties are free to allow a
third party to determine the substantive law.

§30.07 SETTING ASIDE

Section 37(1) of the Arbitration Act 2005 does not allow for an award to be set aside on the
grounds that section 30 was wrongly applied by the arbitral tribunal. To that extent,
section 30 merely serves as guidance to the arbitral tribunal. (10)
This has been recognized by the High Court, in Tanjung Langsat Port Sdn Bhd v. Trafigura
Pte Ltd & Another Case [2016] 4 CLJ 927 at paragraph 43(a):
Sections 30(2) and (5) of the AA 2005 are not independent grounds on which the
arbitral award may be set aside; the reason being the grounds for setting aside
an arbitral award are limited to those found in s. 37 of the AA 2005. This is in fact
apparent from a plain reading of the statute itself, ie, the opening words of s. 37
that ‘An award may be set aside by the High Court only if … .’
P 209
P 210

31. Decision Making by Panel of Arbitrators

(1) Unless otherwise agreed by the parties, in any arbitral proceedings with more than one
arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its
members.
(2) Where so authorized by the parties or by all the members of the arbitral tribunal,
questions of procedure may be decided by the presiding arbitrator.

§31.01 INTRODUCTION
Section 31 of the Arbitration Act 2005 provides for the decision-making process by the
arbitral tribunal, in particular, how a decision is to be made where there is more than one
member of the arbitral tribunal. This provision would have no application to a sole
arbitrator, where the question of a majority decision would not arise.
Section 31 of the Arbitration Act 2005 reflects Article 29 of the 1985 Model Law save for
certain stylistic changes. Section 31(1) resembles the first sentence of Article 29 and section

124
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 31(2) the second sentence of Article 29.
Article 31 of the 1985 Model Law is in turn modelled on Article 31 of the 1976 UNCITRAL
Arbitration Rules, which provides:
Decisions
Article 31
1. When there are three arbitrators, any award or other decision of the
arbitral tribunal shall be made by a majority of the arbitrators.
2. In the case of questions of procedure, when there is no majority or when
the arbitral tribunal so authorizes, the presiding arbitrator may decide on
his own, subject to revision, if any, by the arbitral tribunal.
Article 31 of the 1976 UNCITRAL Arbitration Rules has been retained in Article 33 of the 2013
UNCITRAL Arbitration Rules save that Article 33(1) of the 2013 Rules allows for a situation
where there is more than one arbitrator that is not necessarily limited to three.
Article 33 of the 2013 UNCITRAL Arbitration Rules, which forms part of the 2018 AIAC
Arbitration Rules, provides:
Decisions
Article 33
1. When there is more than one arbitrator, any award or other decision of the
arbitral tribunal shall be made by a majority of the arbitrators.
2. In the case of questions of procedure, when there is no majority or when
the arbitral tribunal so authorizes, the presiding arbitrator may decide
alone, subject to revision, if any, by the arbitral tribunal.
P 210
P 211

§31.02 PARTY AUTONOMY

Section 31 of the Arbitration Act, like most other non-mandatory provisions in the Act,
allows for the familiar ‘two-level system’. The parties are allowed to agree on how a
decision is to be made where there is more than one arbitrator, failing which, the default
provisions in section 31 will apply.
The parties, will in practice, reach an agreement in this regard by the adoption of rules
published by an institution, which the parties are entitled to do under section 2(2)(c) of the
Arbitration Act 2005.
In this context, if the parties have agreed to the 2018 AIAC Arbitration Rules, Article 33 of
the 2013 UNCITRAL Arbitration Rules, which forms part of the 2018 AIAC Arbitration Rules,
effectively deals with decision-making by a majority of the arbitral tribunal in the same
manner as section 31.
Alternatively, if the parties have agreed on the 2017 ICC Rules of Arbitration, Article 32(1) of
these Rules will apply. Article 32(1) of the 2017 ICC Rules of Arbitration provides:
Article 32: Making of the Award
(1) When the arbitral tribunal is composed of more than one arbitrator, an
award is made by a majority decision. If there is no majority, the award
shall be made by the president of the arbitral tribunal alone.
Article 32(1) of the 2017 ICC Rules of Arbitration addresses the significant issue of how a
decision is to be made when a majority cannot be reached. This can happen where the
number of members of the arbitral tribunal is even or they are split. It can also happen
where the number of members of the arbitral tribunal is odd but each member has a
separate opinion and a majority cannot be reached. In these situations, Article 32(1) of the
2017 ICC Rules of Arbitration provides that the president of the arbitral tribunal will make a
decision.

§31.03 DEFAULT
If the parties have not agreed on how more than one arbitrator will reach a decision, the
default provisions of section 31 will apply. The provisions of section 31 are simple and
concise and do not descend into unnecessary detail. Section 31 provides that where there
is more than one arbitrator, decisions will be made by a majority.
Section 31 does not deal with a situation where a majority cannot be reached.
It had been suggested, during the drafting of the 1985 Model Law, that a presiding
arbitrator be allowed to determine the matter, where there was no majority. However, this
suggestion was not adopted, as it was felt that this might reduce the influence of other
members of the arbitral tribunal in reaching a decision. Furthermore, if the parties desired
this, they could agree to such a provision, as Article 29 of the 1985 Model Law was not

125
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 mandatory. (11)
P 211
P 212
In this context, although section 31 of the Arbitration Act 2005, like Article 29 of the 1985
Model Law, allows a decision to be made by a majority, it still requires all members to take
part in deliberations, or at least, have an opportunity to do so. (12)
It is also implicit, in this regard, that all members of the arbitral tribunal need not be
present at the same place to deliberate or make decisions. (13)
Section 31(2) of the Arbitration Act 2005 allows the presiding arbitrator to determine
questions of procedure, where this has been agreed by all parties or all members of the
arbitral tribunal. This provision is intended to ensure the expedient resolution of
procedural questions. Unfortunately, this provision in Article 29 of the 1985 Model Law is
rather vague, as neither the term ‘presiding arbitrator’ nor ‘questions of procedure’ are
defined.
The first of these issues is dealt with by the Arbitration Act 2005, which defines the term
‘presiding arbitrator’ in section 2(1). The second issue is dealt with implicitly. As the
arbitral tribunal has the power to determine both questions of substance and procedure, it
is implicit that the arbitral tribunal must have the power to determine what a question of
procedure is and allow the presiding arbitrator to determine such questions. (14)
P 212
P 213

32. Settlement
(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall
terminate the proceedings and, if requested by the parties and not objected to by the
arbitral tribunal, record the settlement in the form of an award on agreed terms.
(2) An award on agreed terms shall be made in accordance with the provisions of section 33
and shall state that it is an award.
(3) An award made under subsection (1) shall have the same status and effect as an award
on the merits of the case.

§32.01 INTRODUCTION
Section 32 of the Arbitration Act 2005 provides for the consequences of a settlement
achieved during the arbitral proceedings. Fortunately, this is not an infrequent occurrence
in arbitrations, which themselves sometimes foster a settlement by crystallizing the
dispute and encouraging parties to obtain advice.
Section 32 of the Arbitration Act 2005 reflects Article 30 of the 1985 Model Law save for
certain minor stylistic changes.
Article 36 of the 1985 Model Law is in turn modelled on Articles 34(1) and (3) of the 1976
UNCITRAL Arbitration Rules. These provisions are identical in all material aspects save that
Article 34(1) additionally provides that ‘the arbitral tribunal is not obliged to give reasons
for such an award.’
Articles 34(1) and (3) of the 1976 UNCITRAL Arbitration Rules are maintained in the 2013
UNCITRAL Arbitration Rules, which form part of the 2018 AIAC Arbitration Rules, as Articles
36(1) and (3).

§32.02 TERMINATION
Section 32(1) of the Arbitration Act 2005 provides that if a settlement is achieved during
the arbitral proceedings, the arbitral tribunal ‘shall’ terminate the proceedings.
The use of the imperative ‘shall’ means that, unless the alternative of an award on agreed
terms is made, the arbitral tribunal must terminate the proceedings upon a settlement
being achieved by the parties.

§32.03 AWARD ON AGREED TERMS

As an alternative to termination, section 32(1) allow for an award on agreed terms provided
that two requirements are satisfied:
(1) there is a request by the parties for such an award; and
(2) there is no objection to such an award by the arbitral tribunal.
P 213
P 214
The first requirement appears obvious. As there has been a settlement and the parties
desire an award on agreed terms, a request must come from both parties. This is also
intended to avoid any potential dispute as to the existence or the terms of the settlement.
(15) As a matter of practice, although both parties must desire such an award, the formal
request can be made by one party. (16) This will usually be followed in practice by
confirmation by the other party.
The second requirement was controversial at the time the 1985 Model Law was being

126
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 drafted. It was argued that the requirement for the arbitral tribunal’s consent was contrary
to the principle of party autonomy, which should entitle the parties to an award on agreed
terms if they desired it without the need for consent by the arbitral tribunal.
However, this argument fails to appreciate the distinction between the parties’ right to
have the proceedings terminated upon settlement and the right to have an award on
agreed terms. The former is in accordance with the principles of party autonomy. The latter
is not practical, as the arbitral tribunal should not be compelled to issue an award they
did not wish to make and may simply resign to avoid this. Moreover, the arbitral tribunal
may have legitimate grounds for refusing to make such an award, where, for example, if it
was fraudulent, contrary to law or public policy or against fundamental notions of justice
and fairness. (17)

§32.04 FORM AND EFFECT

Sections 32(2) and (3) of the Arbitration Act 2005 provide that an award on agreed terms
must be in the same form as an ordinary award and will have the same effect. This is
particularly important for the purpose of recognition and enforcement of an award on
agreed terms in accordance with the New York Convention. An award on agreed terms is
also liable to be set aside or challenged on enforcement, although this will be infrequent
given the consensual nature of such an award.
P 214
P 215

33. Form and Contents of Award

(1) An award shall be made in writing and subject to subsection (2) shall be signed by the
arbitrator.
(2) In arbitral proceedings with more than one arbitrator, the signatures of the majority of
all members of the arbitral tribunal shall be sufficient provided that the reason for any
omitted signature is stated.
(3) An award shall state the reasons upon which it is based, unless—
(a) the parties have agreed that no reasons are to be given; or
(b) the award is an award on agreed terms under section 32.
(4) An award shall state its date and the seat of arbitration as determined in accordance
with section 22 and shall be deemed to have been made at that seat.
(5) After an award is made, a copy of the award signed by the arbitrator in accordance with
subsections (1) and (2) shall be delivered to each party.
(6) Subject to subsection (8), unless otherwise agreed by the parties, the arbitral tribunal
may, in the arbitral proceedings before it, award simple or compound interest from such
date, at such rate and with such rest as the arbitral tribunal considers appropriate, for
any period ending not later than the date of payment of the whole or any part of –
(a) any sum which is awarded by the arbitral tribunal in the arbitral proceedings;
(b) any sum which is in issue in the arbitral proceedings but is paid before the date of
the award; or
(c) costs awarded or ordered by the arbitral tribunal in the arbitral proceedings.
(7) Nothing in subsection (6) shall affect any other power of an arbitral tribunal to award
interest.
(8) Where an award directs a sum to be paid, that sum shall, unless the award otherwise
directs, carry interest as from the date of the award and at the same rate as a judgment
debt.

§33.01 INTRODUCTION
Section 33 of the Arbitration Act 2005 provides for the form, content and publication of an
award. Essentially, an award must:
(1) be in writing;
(2) be signed;
(3) contain reasons;
(4) state its date;
(5) state its seat; and
(6) be delivered to the parties.
P 215
P 216
These requirements, together with their exceptions, are considered in this Chapter. In
addition to these requirements, section 33 also provides for the arbitral tribunal’s power to
award interest.
Section 33 of the Arbitration Act 2005 is modelled on Article 31 of the 1985 Model Law. In
particular:
(1) section 33(1) reflects the first sentence of Article 31(1);

127
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (2) section 33(2) reflects the second sentence of Article 31(1);
(3) section 33(3) reflects Article 31(2);
(4) section 33(4) reflects Article 31(3); and
(5) section 33(5) reflects Article 31(4).
There are minor stylistic changes but these provisions are essentially the same. There is,
however, no equivalent to section 33(6) of the Arbitration Act 2005 in the 1985 Model Law.
Other jurisdictions that have adopted the 1985 Model Law have also made additions to
Article 31 to include interest. (18)
Article 31 of the 1985 Model Law is in turn based on various provisions of the 1976 UNCITRAL
Arbitration Rules. In particular:
(1) Article 31(1) of the 1985 Model Law is modeled on Article 32(4) of the 1976
UNCITRAL Arbitration Rules, which provides:
An award shall be signed by the arbitrators and it shall contain the
date on which and the place where the award was made. Where
there are three arbitrators and one of them fails to sign, the award
shall state the reason for the absence of the signature.
(2) Article 31(2) of the 1985 Model Law is based on Article 32(3) of the 1976
UNCITRAL Arbitration Rules, which provides:
The arbitral tribunal shall state the reasons upon which the award is
based, unless the parties have agreed that no reasons are to be
given.
(3) the requirements of Article 31(3) of the 1985 Model Law are also set out in
Article 32(4) of the 1976 UNCITRAL Arbitration Rules.
(4) Article 31(4) of the 1985 Model Law is similar to Article 32(6) of the 1976
UNCITRAL Arbitration Rules, which provides:
Copies of the award signed by the arbitrators shall be communicated
to the parties by the arbitral tribunal.
Articles 32(3), (4) and (6) of the 1976 UNCITRAL Arbitration Rules are preserved as Articles
34(3), (4) and (6) of the 2013 UNCITRAL Arbitration Rules, which form part of the 2018 AIAC
Arbitration Rules. The only change made in this regard is the substitution of the reference
P 216 to ‘three arbitrators’ in Article 32(4) of the 1976 UNCITRAL Arbitration Rules with the words
P 217 ‘more than one arbitrator’ in Article 34(4) of the 2013 UNCITRAL Arbitration Rules. This
change is to allow for a scenario where there is more than a sole arbitrator but not
necessarily limited to three.
In addition to Article 34 of the 2013 UNCITRAL Arbitration Rules, Rule 12 of the 2018 AIAC
Arbitration Rules provides:
Technical Review and Awards
1. Following the final oral or written submissions, the arbitral tribunal shall
declare the proceedings closed. The arbitral tribunal’s declaration and
the date on which the proceedings are closed shall be communicated in
writing to the Parties and to the Director. After this date, the Parties may
not submit any further evidence or make any further submission with
respect to the matters to be decided in the award.
2. The arbitral tribunal shall, before signing the award, submit its draft of the
final award (the ‘Draft Final Award’), to the Director within three months for
a technical review. The time limit shall start to run from the date when the
arbitral tribunal declares the proceedings closed pursuant to Rule 12(1).
3. The time limit may be extended by the arbitral tribunal with the consent
of the Parties and upon consultation with the Director. The Director may
further extend the time limit in the absence of consent between the
Parties if deemed necessary.
4. The Director may, as soon as practicable and without affecting the arbitral
tribunal’s liberty of decision, draw the arbitral tribunal’s attention to any
perceived irregularity as to the form of the award and any errors in the
calculation of interest and costs.
5. If there are no perceived irregularities pursuant to Rule 12(4), the Director
shall notify the arbitral tribunal in writing that the technical review has
been completed.
6. If there are perceived irregularities pursuant to Rule 12(4), the arbitral
tribunal shall resubmit the Draft Final Award to the Director within 10 days
from the date on which the arbitral tribunal is notified of such
irregularities. The time limit for the arbitral tribunal to consider any
irregularities under Rule 12(4) may be extended by the Director. Upon
completion of the technical review, the Director shall notify the arbitral
tribunal in writing of the completion of the technical review.
7. The arbitral tribunal shall deliver sufficient copies of the award to the

128
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Director. The award shall only be released to the Parties by the Director
upon full settlement of the costs of arbitration.
8. The Director shall notify the Parties of its receipt of the award from the
arbitral tribunal. The award shall be deemed to have been received by
the Parties upon collection by hand by an authorised representative or
upon delivery by registered post.
9. If the Parties reach a settlement after the arbitration has commenced, the
arbitral tribunal shall, if so requested by the Parties, record the
settlement in the form of an award made by the consent of the Parties. If
the Parties do not require a consent award, the parties shall inform the
Director that a settlement has been reached. Notwithstanding the
settlement reached, the arbitration shall only be deemed concluded and
the arbitral tribunal discharged upon full settlement of the costs of
arbitration.
10. By agreeing to arbitration under the AIAC Arbitration Rules, the Parties
undertake to carry out the award immediately and without delay, and
they also irrevocably waive their rights to any form of appeal, review or
P 217 recourse to any court or other judicial authority insofar as such waiver may
P 218 be validly made, and the Parties further agree that an award shall be
final and binding on the Parties from the date it is made.
Sections 33(6), (7) and (8) were introduced by the Arbitration (Amendment) (No 2) Act 2018.
Prior to amendments in 2018, section 33(6) provided:
Unless otherwise provided in the arbitration agreement, the arbitral tribunal
may-
(a) award interest on any sum of money ordered to be paid by the award from
the date of the award to the date of realisation; and
(b) determine the rate of interest.

§33.02 AWARD MUST BE IN WRITING

Section 33(1) of the Arbitration Act 2005 requires the award to be in writing. This
requirement, which appears obvious, is mandatory for the purpose of certainty. (19)

§33.03 AWARD MUST BE SIGNED

Sections 33(1) and (2) of the Arbitration Act 2005 require the award to be signed. Where
there is more than one arbitrator, a majority is sufficient.
This approach at first glance appears consistent with section 31(1). However, section 31(1)
allows parties to agree on the decision-making process. Therefore, the parties may have
agreed that the decisions are to be made otherwise than by a majority, for example by the
presiding arbitrator. Section 33(2) does not expressly provide for such a scenario. (20)
The question therefore arises whether the requirements for a signature in sections 33(1) and
(2) are mandatory. In this regard, a distinction has to be made between sections 33(1) and
(2). Insofar as section 33(1) is concerned, the requirement for a signature is mandatory, as it
is necessary for the sake of certainty. (21) However, with respect to section 33(2), given that
it does not appear entirely consistent with section 31(1), the requirements may not need to
be strictly complied with provided that what has been agreed by the parties has been
complied with. For example, if the parties have agreed that the presiding arbitrator in a
three-member arbitral tribunal is entitled to decide where there is no majority, the
presiding arbitrator’s signature alone should suffice. (22)
P 218 Section 31(2) of the Arbitration Act 2005 provides that reasons for the omitted signature
P 219 must be stated. This provision applies to situations where a member of the arbitral
tribunal has passed away, is unwell or simply cannot be reached. This provision also
applies to situations where a member of the arbitral tribunal declines to sign the award.
Hence, the question of whether such a member of the arbitral tribunal is entitled to give a
dissenting opinion is left open by the Arbitration Act 2005, like the 1985 Model Law. The
Analytical Commentary suggests that the question is one of procedure that can be
determined, by the parties or, failing which, the arbitral tribunal under Articles 19(1) and
(2) of the 1985 Model Law, to which sections 21(1) and (2) of the Arbitration Act 2005
correspond. (23)
Apart from this, it would appear that a member of the arbitral tribunal would be entitled
to give any reason for omitting her signature. There does not appear to be any restriction in
this regard. (24)

§33.04 THE AWARD MUST CONTAIN REASONS

Section 33(3) of the Arbitration Act 2005, as a general rule, requires the arbitral tribunal to
give their reasons in an award. Where this general rule applies, the High Court, in Tanjung
Langsat Port Sdn Bhd v. Trafigura Pte Ltd & Another Case [2016] 4 CLJ 927, clarified that the
question is whether the award taken as a whole informs the parties of the basis on which

129
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the arbitral tribunal reached their decision. Although detailed reasons are not required, it
was insufficient for the arbitral tribunal to merely refer to submissions and documents. The
High Court, in Tanjung Langsat supra at paragraphs 81, 82, 87, inter alia, held:
[81] In the Indian case of Som Datt Builders Ltd v. State of Kerala [2009] INSC
1600, the Supreme Court of India at 310 [25]:
25. The requirement of reasons in support of the award under Section
31(3) is not an empty formality. It guarantees fair and legitimate
consideration of the controversy by the arbitral tribunal. It is true
that arbitral tribunal is not expected to write judgment like a court
nor it is expected to give elaborate and detailed reasons in support
of its finding/s but mere noticing the submissions of the parties or
reference to documents is no substitute for reasons which the
arbitral tribunal is obliged to give. Howsoever brief these may be,
reasons must be indicated in the award as that would reflect thought
process leading to a particular conclusion. To satisfy the requirement
of Section 31(3), the reasons must be stated by the arbitral tribunal
upon which the award is based; want of reasons would make such
award legally flawed.
(emphasis added)
[82] … Whilst it is true that s. 33(3) of the AA 2005 provides that an award shall
state the reasons upon which it is based, in Som Datt it is stated the extent of
the judgment required of the arbitrator is as reflected in the statement
emboldened in para. 81 above.
…
P 219
P 220
[87] Applying the principles which can be gleaned from TMM Division which is of
persuasive value, it cannot be gainsaid that when the partial award is ‘taken as
a whole’, it more than adequately ‘informs the parties of the bases on which the
(majority tribunal) reached its decision’ on the award of damages for Trafigura’s
loss of use of the facility.
There are two exceptions to this general rule. First, where the parties have agreed to
dispense with reasons and, second, where there is an award on agreed terms.
With respect to the first exception, the Analytical Commentary suggests that the agreement
may be express or implied. An agreement may be express where a reference is made to
arbitration rules that dispense with the need for reasons. An agreement may be implied
where a dispute is submitted in an established arbitral system where reasons are not
required. (25)
Section 33(3) represents a compromise between the common law system and the civil law
system. The common law system includes certain types of arbitration, where reasons are
dispensed with for reasons of speed and to make the award more difficult to challenge.
The civil law system on the other hand favours reasons for the beneficial influence it is said
to have on the award and because it makes the award easier to understand. Section 33(3)
represents a compromise as it requires reasons but allows the parties to agree to dispense
with it. (26)
An award that does not include reasons may be liable to be set aside on the grounds that
the arbitral procedure was not complied with under section 37(1)(a)(vi) of the Arbitration
Act 2005. (27)
However, the absence of reasons is unlikely to amount to breach of the rules of natural
justice, rendering the award liable to be set aside under sections 37(1)(b)(ii) and 37(2)(b).
This was clarified by the High Court, in Tanjung Langsat supra at paragraph 78:
… nemo judex in causa sua (rule against bias) and audi alteram partem (the right
to be heard) comprise the twin pillars of the rules of natural justice. Thus it is
evident that since the duty to give reasons is not part of the rules of natural
justice, it is my respectful view that it is not a ground on which an arbitral award
may be set aside under s. 37(1)(b)(ii) read with s. 37(2)(b) of the AA 2005 … .

§33.05 THE AWARD MUST STATE ITS DATE

Section 33(4) of the Arbitration Act 2005 requires the arbitral tribunal to date the award.
Although this requirement is expressed in section 33(4) in mandatory terms, the absence of
a date is unlikely to render the award invalid. (28)
P 220
P 221
The date stated in the award may be rebutted by the parties or the arbitrators. The
position may be taken that the date on the award is earlier or later than the date the
award was actually rendered. (29)

130
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 It is also important to note that for the purposes of correction, interpretation or setting
aside of the award under sections 35 and 37 of the Arbitration Act 2005, the date from
which time starts to run is the date of receipt of the award and not the date of the award.

§33.06 THE AWARD MUST STATE ITS SEAT

Section 33(4) of the Arbitration Act 2005 also requires the arbitral tribunal to state the seat
of the arbitration in the award. Section 33(4) further provides that the award shall be
deemed to have been made at the seat stated therein. This is an irrebuttable
presumption. This presumption recognizes that the making of an award is a legal act, which
in practice is not one factual act, but deliberations at various places, as well as through
telephone and correspondence. (30)
Although the requirement to state the seat is expressed in mandatory terms in section
33(4), the absence of such a statement is unlikely to render the award invalid. (31)

§33.07 THE AWARD MUST BE DELIVERED

Section 33(5) of the Arbitration Act 2005 requires the award to be delivered to each party.
The delivery of the award is of significance, as the date of receipt starts time running for
the purpose of an application to correct, interpret or set aside an award under sections 35
and 37 of the Arbitration Act 2005. A party is also required to produce a copy of the award
for the purposes of an application for recognition and enforcement under section 38 of the
Arbitration Act 2005. Apart from the delivery of the award, the Arbitration Act 2005 does
not require any other administrative act, such as filing, registration or deposit of the
award. (32)
The Arbitration Act 2005 does not expressly provide when the award becomes binding.
During the drafting of the 1985 Model Law, the following three options were considered:
(1) an award becomes binding on the date it is made;
(2) an award becomes binding on the date it is delivered; or
(3) an award becomes binding on the date on which the period of time for making an
application to set aside the award has expired.
P 221
P 222
However, none of these options were adopted in the 1985 Model Law, or subsequently in
the Arbitration Act 2005. As such, the date on which the award becomes binding remains
ambiguous.

§33.08 ADDITIONAL REQUIREMENTS AGREED BY THE PARTIES

Although the requirements considered under §33.02-§33.07 are mandatory, the parties are
free to agree upon additional requirements as a matter of procedure under section 21(1) of
the Arbitration Act 2005. In practice, this is usually done by the parties agreeing on a
particular set of arbitration rules.
For example, if the parties have agreed upon the 2018 AIAC Arbitration Rules, the
additional requirements of these rules as set out in Rule 12 would need to be complied
with.
The additional requirements of Rule 12 of the 2018 AIAC Arbitration Rules, which are quoted
under §33.01, include:
(1) the requirement that the award be rendered in draft to the Director of the AIAC within
three months of final submissions;
(2) the requirement that the Director of the AIAC may conduct a technical review of the
award;
(3) the requirement that the award will only be released to the parties upon full
settlement of costs; and
(4) more detailed requirements on the date the award is deemed to be received by the
parties.

§33.09 INTEREST
Sections 33(6)-(8) of the Arbitration Act 2005 adopt the familiar ‘two-level system’ found in
the 1985 Model Law. First, the parties are free to agree on the power of the arbitral tribunal
to award interest, and, second, in the absence of agreement, the arbitral tribunal is given
the default power to award interest.

[A] Party Autonomy

With respect to the parties’ freedom to agree on the arbitral tribunal’s power to award
interest, this is usually done in practice by the adoption of arbitration rules in accordance
with section 2(2)(c) of the Arbitration Act 2005.

[B] Default Powers

131
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 222 Sections 33(6)-(8) of the Arbitration Act 2005 expressly allow for the arbitral tribunal to
P 223 grant pre- and post-award interest. Prior to the amendments in 2018, section 33(6)
expressly allowed for the grant of post-award interest, but the position on pre-award
interest was unclear. §33.09[B][1] and §33.09[B][2] infra consider the position on pre- and
post-award interest prior to the amendments in 2018.
[1] Post-award Interest
In the event the parties have not agreed on the arbitral tribunal’s power to award interest,
prior to the amendments in 2018, the default power under section 33(6) applied. This
default power expressly included the power to grant post-award interest, as it referred to
the period between the date of the award and the date of realization of the award.
This was confirmed by the High Court, in Quality Property Development Sdn Bhd v. Xavier
Francis & Anor [2014] 1 LNS 67 at paragraph 32:
On the issue of interest in Question (vii), the Arbitrator had allowed interest at
the rate of 4% per annum from the date of the award to the date of realisation.
There is nothing illegal with this as section 33 of the Arbitration Act 2005 allows
the Arbitrator to award interest from date of the award to the date of
realisation.
The current sections 33(6) and (8) similarly allow for the arbitral tribunal to grant post-
award interest.
[2] Pre-award Interest
The question of whether section 33(6), prior to the amendments in 2018, included the
default power to award pre-award interest was less clear. Section 33(6) did not previously
expressly grant such a power. However, the question remained as to whether such a power
was implicit.
The High Court, in Kerajaan Malaysia (Kementerian Sumber Asli dan Alam Sekitar) v.
Kumpulan Sakata Sdn Bhd [2016] 7 CLJ 417 at paragraphs 14-18, 20-27; Kerajaan Malaysia v.
Tasja Sdn Bhd [2016] 6 CLJ 738 at paragraphs 51-53, 56 to 58, 64, 71; and Kejuruteraan Bintai
Kindenko Sdn Bhd v. Serdang Baru Properties Sdn Bhd & Another Case (No 2) [2018] 1 CLJ 369
at paragraphs 35 and 36, while accepting that it was bound by the judgment of the Court of
Appeal, in Far East Holdings Bhd & Anor v. Majlis Ugama Islam dan Adat Resam Melayu
Pahang & Another Appeal [2015] 8 CLJ 58 at paragraph 98, lucidly summarized the
arguments in favour of allowing pre-award interest:
(1) that, under sections 30(1) and (5) of the Arbitration Act 2005, the arbitral
tribunal should decide the dispute in accordance with the substantive law
of Malaysia, the terms of the agreement and the usages of the trade;
(2) with respect to the substantive law of Malaysia, section 11 of the Civil Law
Act 1956 provides that:
Power of Courts to award interest on debts and damages
11. In any proceedings tried in any Court for the recovery of any debt or
damages, the Court may, if it thinks fit, order that there shall be
P 223 included in the sum for which judgment is given interest at such rate
P 224 as it thinks fit on the whole or any part of the debt or damages for
the whole or any part of the period between the date when the cause
of action arose and the date of the judgment:
Provided that nothing in this section —
(a) shall authorize the giving of interest upon interest;
(b) shall apply in relation to any debt upon which interest is
payable as of right whether by virtue of any agreement or
otherwise; or
(c) shall affect the damages recoverable for the dishonour of a bill
of exchange.
(3) with respect to the arbitration agreement, the arbitral tribunal had
an implied power to grant pre-award interest;
(4) the courts had consistently taken the position, in the light of the
foregoing, under section 21 of the Arbitration Act 1952, that the
arbitral tribunal had the power to award pre-award interest; (33)
(5) that Parliament is presumed to know the law relating to an arbitral
tribunal’s power to grant pre-award interest at the time of enacting
the Arbitration Act 2005. The Act should accordingly not be taken as
effecting a fundamental alteration in the law relating to the arbitral
tribunal’s power to grant pre-award interest without words that
unmistakably point to that conclusion;
(6) in this regard, section 33(6) merely provides for the arbitral
tribunal’s power to grant post award interest and is silent on pre-
award interest;

132
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (7) that the inability of an arbitrator to grant pre-award interest would
be contrary to the objective of uniformity sought to be achieved by
enacting the 1985 Model Law as the Arbitration Act 2005 in Malaysia;
and
(8) that the inability of the arbitral tribunal to grant pre-award interest
would make Malaysia less attractive as a seat of arbitration.
Despite these persuasive arguments, the Federal Court, in Far East Holdings Bhd & Anor v.
Majlis Ugama Islam dan Adat Resam Melayu Pahang (and 2 other Appeals) [2017] 8 AMR 313
at paragraph 187, confirmed that, in the absence of agreement, the arbitral tribunal does
not have the power to grant pre-award interest:
Unless otherwise provided in the arbitration agreement, an arbitrator could
only award post-award interest. The AA 2005 does not contemplate the award of
pre-award interest, unless so provided in the arbitration agreement. There was
no indication that pre-award interest was provided in the arbitration
agreement. Pre-award interest could not be awarded. Post-award interest may
be granted. But since post-award interest was not pleaded, it would not seem
fair that the discretion to award interest should be exercised in favour of post-
award interest.
Soon after, the Arbitration (Amendment) (No 2) Act 2018 reversed the effect of the judgment
of the Federal Court, in Far East supra, by expressly allowing the arbitral tribunal to grant
pre-award interest by the amended section 33(6).
P 224
P 225

34. Termination of Proceedings

(1) The arbitral proceedings shall be terminated by a final award or by an order of the
arbitral tribunal in accordance with subsection (2).
(2) The arbitral tribunal shall order the termination of the arbitral proceedings where —
(a) the claimant withdraws the claim, unless the respondent objects to the
withdrawal and the arbitral tribunal recognizes the respondent’s legitimate
interest in obtaining a final settlement of the dispute;
(b) the parties agree on the termination of the proceedings; or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any
other reason become unnecessary or impossible.
(3) Subject to the provisions of section 35 and subsection 37(6), the mandate of the arbitral
tribunal shall terminate with the termination of the arbitral proceedings.
(4) Unless otherwise provided by any written law, the death of a party does not terminate –
(a) the arbitral proceedings; or
(b) the authority of the arbitral tribunal.

§34.01 INTRODUCTION
Section 34 of the Arbitration Act 2005 provides for the termination of the arbitral
proceedings in five circumstances:
(1) by a final award;
(2) by withdrawal of the claim;
(3) by agreement;
(4) by lack of necessity or impossibility; and
(5) by the death of a party.
These five grounds for termination are considered in detail in §34.02-§34.06 infra.
There are additional grounds for the termination of arbitral proceedings that are not set
out in section 34. For example, section 27(a) of the Arbitration Act 2005 provides for the
termination of the arbitral proceedings if the claimant fails to communicate the statement
of claim, and section 32(1) of the Arbitration Act 2005 provides for the termination of the
arbitral proceedings if the dispute is settled.
Sections 34(1), (2) and (3) of the Arbitration Act 2005 are based on Articles 32(1), (2) and (3)
of the 1985 Model Law respectively save for minor stylistic changes. Section 34(4) of the
Arbitration Act 2005 is based on Articles 32(4) and (5) of Schedule 1 of the New Zealand
Arbitration Act 1996.
P 225
P 226 The purpose of section 34 of the Arbitration Act 2005 is:
(1) to provide guidance for this last phase of the arbitral proceedings;
(2) to provide for the consequential termination of the mandate of the arbitral tribunal;
and
(3) to provide for certainty with respect to the point of time of termination of the
proceedings.

133
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court, in Segamat Parking Services Sdn Bhd v. Majlis Daerah Segamat Utara &
Another Case [2009] 1 CLJ 942 at paragraph 10, clarified that the ‘arbitral proceedings’
referred to in section 34 are the proceedings exclusively before the arbitral tribunal and
not any subsequent or related proceedings. (34)

§34.02 FINAL AWARD

Section 34(1) of the Arbitration Act 2005 provides that the arbitral proceedings shall be
terminated by a final award.
The words ‘final award’ are not defined in the Arbitration Act 2005, although the word
‘award’ is defined in section 2(1) and is considered in §2.02 supra.
Based on the definition of ‘award’ in section 2(1), a final award would appear to be a
decision by an arbitral tribunal on the substance of the dispute that is not an interlocutory
order. To this, it can be added that the final award is the decision at the arbitral tribunal
that completes and fully disposes of the substance of the dispute. (35)

§34.03 WITHDRAWAL
Section 34(2)(a) of the Arbitration Act 2005 provides that the arbitral tribunal shall order
the termination of the arbitral proceedings upon the withdrawal of the claim unless the
respondent objects and is found to have a legitimate interest in the final settlement of the
dispute.
There was concern about this provision when the 1985 Model Law was being drafted, as it
was felt that a claimant might be compelled to proceed with a claim against a respondent
it did not wish to. However, the provision achieves a balance, by granting the arbitral
tribunal a discretion whether to terminate or proceed with the arbitration. (36) Factors
that are likely to be considered by the arbitral tribunal are:
(1) the stage at which the claim is being withdrawn;
(2) the likelihood of the claimant commencing fresh proceedings; and
(3) the existence of a counterclaim.
P 226 With respect to the first of these factors, it should be borne in mind that under section
P 227 27(a) of the Arbitration Act 2005, the arbitral tribunal mandatorily is required to
terminate the arbitral proceeding if the Statement of Claim is not communicated.
Depending on the circumstances, the later the claimant seeks to withdraw the claim; the
less likely is the arbitral tribunal to allow this.

§34.04 AGREEMENT
Section 34(2)(b) of the Arbitration Act 2005 provides that the arbitral tribunal shall order
the termination of the arbitral proceedings where the parties agree on the termination.
Unlike section 34(2)(a), under section 34(2)(b), the arbitral tribunal has no discretion and
must terminate the arbitral proceedings upon agreement by the parties. This conforms
with the principle of party autonomy in arbitration.
Section 34(2)(b) does not expressly provide for a situation where the parties have agreed in
advance that the arbitration agreement will terminate, for example, within so many days
after the date of the arbitration agreement. Therefore, there remains some uncertainty
whether such a provision would be enforceable. It is submitted that there is no reason in
principle why such an agreement should not be enforceable.

§34.05 UNNECESSARY OR IMPOSSIBLE

Section 34(2)(c) of the Arbitration Act 2005 allows the arbitral tribunal to terminate the
arbitral proceedings where it finds its continuance would be unnecessary or impossible.
The words ‘unnecessary’ and ‘impossible’ are not defined in the Arbitration Act 2005. The
continuation of the arbitral proceedings will be unnecessary where there has been a
settlement or the dispute has been resolved by another forum, for example the courts.
Insofar as settlements are concerned, this is specifically dealt with by section 32(1) of the
Arbitration Act 2005. Therefore, section 34(2)(c) is probably intended to cover the latter
scenario where the dispute has already been resolved by another forum and other residual
situations where the continuance of the arbitral proceedings will be unnecessary.
The word ‘impossible’ has a specific legal meaning in Malaysia, given that it is used in
section 57 of the Contracts Act 1950, which provides:
57. Agreement to do impossible act
(1) An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful
(2) A contract to do an act which, after the contract is made, becomes
impossible, or by reason of some event which the promisor could not
prevent, unlawful, becomes void when the act becomes impossible or
unlawful.

134
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Compensation for loss through non-performance of act known to be
impossible or unlawful
(3) Where one person has promised to do something which he knew, or, with
reasonable diligence, might have known, and which the promisee did not
know, to be impossible or unlawful, the promisor must make
P 227 compensation to the promisee for any loss which the promisee sustains
P 228 through the non-performance of the promise.
ILLUSTRATIONS
(a) A agrees with B to discover treasure by magic. The agreement is void.
(b) A and B contract to marry each other. Before the time fixed for the
marriage, A goes mad. The contract becomes void.
(c) A contracts to marry B, being already married to C, and being forbidden by
the law to which he is subject to practise polygamy. A must make
compensation to B for the loss caused to her by the non-performance of
his promise.
(d) A contracts to take in cargo for B at a foreign port. A’s Government
afterwards declares war against the country in which the port is situated.
The contract becomes void when war is declared.
(e) A contracts to act at a theatre for six months in consideration of a sum
paid in advance by B. On several occasions A is too ill to act. The contract
to act on those occasions becomes void.
The test to be applied in relation to section 57 of the Contracts Act 1950 has been set out by
the Federal Court, in Ramli bin Zakaria & Ors v. Government of Malaysia [1982] 2 MLJ 257 at
pages 261-262:
In short it would appear that where after a contract has been entered into there
is a change of circumstances but the changed circumstances do not render a
fundamental or radical change in the obligation originally undertaken to make
the performance of the contract something radically different from that
originally undertaken, the contract does not become impossible and it is not
discharged by frustration.
Similarly, the Federal Court, in Pacific Forest Industries Sdn Bhd & Anor v. Lin Wen-Chih &
Anor [2009] 6 MLJ 293 at paragraph 22, held:
A contract does not become frustrated merely because it becomes difficult to
perform … A contract is frustrated when subsequent to its formation, a change of
circumstances renders the contract legally or physically impossible to be
performed … .
It is submitted that this test will similarly be applied to determine whether the
continuance of the arbitral proceedings will be ‘impossible’. The continuation of the
proceedings will be impossible where the claimant does not communicate his statement
of claim, does not proceed with the claim or withdraws the claim. However, all of these
situations are specifically dealt with by sections 27(a), (d) and 34(2)(a) of the Arbitration Act
2005 respectively. Therefore, it is difficult to envisage the situation section 34(2)(c) is
intended to cover other than residual matters that may be covered by the general test.
The High Court, in The Government of India v. Vedanta Ltd (legal successor to Cairn India Ltd)
& Anor [2018] MLJU 630, decided that delay alone would not make the continuation of
arbitral proceedings impossible. As to abandonment, this could be either expressly agreed
P 228 between the parties or implied. If abandonment was to be implied, there must be clear
P 229 and unequivocal conduct of the parties having abandoned the arbitral proceedings. In
this context, the High Court, in Vedanta supra at paragraphs 162 and 164, held:
[162] Thus an Arbitral Tribunal may not terminate an arbitral proceeding for
want of prosecution on account of delay unless contractually so empowered by
the agreement of the parties under the lex arbitri. I would agree with learned
counsel for the Defendants that there can be no frustration, self-induced or
otherwise, of a reference to Arbitration solely on account of delay.
…
[164] With respect to the issue of abandonment, that must certainly be facts-
centric and short of a clear, unequivocal conduct of having abandoned the
Arbitration proceedings, this Court must be slow to infer one when to do so
would be to frustrate the parties express and original intention to resolve fully
and finally the disputes between the parties which in this case had been
resolved partially with the issuance of a Partial Award on liability and awaiting
a Final Award on quantification if there are still disputes on it.

§34.06 DEATH
Section 34(4) of the Arbitration Act 2005 provides that the death of a party does not

135
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 terminate the arbitral proceedings.
P 229
P 230

35. Correction and Interpretation of Award or Additional Award

(1) A party, within thirty days of the receipt of the award, unless any other period of time
has been agreed upon by the parties —
(a) upon notice to the other party, may request the arbitral tribunal to correct in the
award any error in computation, any clerical or typographical error or other error
of similar nature; or
(b) upon notice to and with the agreement of the other party, may request the
arbitral tribunal to give an interpretation of a specific point or part of the award.
(2) Where the arbitral tribunal considers the request made under subsection (1) to be
justified, it shall make the correction or give the interpretation within thirty days of the
receipt of the request and such interpretation shall form part of the award.
(3) The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a) on
its own initiative within thirty days of the date of the award.
(4) Unless otherwise agreed by the parties, a party may, within thirty days of the receipt of
the award and upon notice to the other party, request the arbitral tribunal to make an
additional award as to claims presented in the arbitral proceedings but omitted from
the award.
(5) Where the arbitral tribunal considers the request under subsection (4) to be justified, it
shall make the additional award within sixty days from the receipt of such request.
(6) The arbitral tribunal may, where it thinks necessary, extend the period of time within
which it shall make a correction, interpretation or an additional award under this
section.
(7) The provisions of section 33 shall apply to a correction or interpretation of the award or
to an additional award.

§35.01 INTRODUCTION
Section 35 of the Arbitration Act 2005 allows for a correction, interpretation or addition to
the award after it has been made. Section 35 is necessary because section 34 provides that
the mandate of the arbitral tribunal terminates upon the final award being made.
Section 35 of the Arbitration Act 2005 is based on Article 33 of the 1985 Model Law. In
particular:
(1) sections 35(1) and (2) are based on Article 33(1);
(2) section 35(3) is based on Article 33(2);
(3) sections 35(4) and (5) are based on Article 33(3);
(4) section 35(6) is based on Article 33(4); and
(5) section 35(7) is based on Article 33(5).
P 230
P 231
The only significant change is the inclusion of the words ‘it thinks’ in section 35(6), which
are not found in Article 33(4). These words have been included to emphasize that the
arbitral tribunal has the discretion to extend the time for making a correction,
interpretation or addition to the award.
Article 33 of the 1985 Model Law is in turn based on Articles 36-38 of the 1976 UNCITRAL
Arbitration Rules.
These provisions of the 1976 UNCITRAL Arbitration Rules have been largely retained in the
2013 UNCITRAL Arbitration Rules, which form part of the 2018 AIAC Arbitration Rules.
Articles 37-39 of the 2013 UNCITRAL Arbitration Rules provide:
Interpretation of the award
Article 37
1. Within 30 days after the receipt of the award, a party, with notice to the
other parties, may request that the arbitral tribunal give an interpretation
of the award.
2. The interpretation shall be given in writing within 45 days after the receipt
of the request. The interpretation shall form part of the award and the
provisions of article 34, paragraphs 2 to 6, shall apply.
Correction of the award
Article 38
1. Within 30 days after the receipt of the award, a party, with notice to the
other parties, may request the arbitral tribunal to correct in the award any
error in computation, any clerical or typographical error, or any error or
omission of a similar nature. If the arbitral tribunal considers that the

136
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 request is justified, it shall make the correction within 45 days of receipt of
the request.
2. The arbitral tribunal may within 30 days after the communication of the
award make such corrections on its own initiative.
3. Such corrections shall be in writing and shall form part of the award. The
provisions of article 34, paragraphs 2 to 6, shall apply.
Additional award
Article 39
1. Within 30 days after the receipt of the termination order or the award, a
party, with notice to the other parties, may request the arbitral tribunal to
make an award or an additional award as to claims presented in the
arbitral proceedings but not decided by the arbitral tribunal.
2. If the arbitral tribunal considers the request for an award or additional
award to be justified, it shall render or complete its award within 60 days
after the receipt of the request. The arbitral tribunal may extend, if
necessary, the period of time within which it shall make the award.
3. When such an award or additional award is made, the provisions of article
34, paragraphs 2 to 6, shall apply.
The significant alteration between the UNCITRAL Arbitration Rules and the 1985 Model Law
is in the provision dealing with the interpretation of the award, which is considered in
§35.03 infra.
The arbitral tribunal’s ability to correct, interpret or make an additional award is
considered separately below. Before moving to these specific issues three general matters
are considered here, that is the interpretation of section 35, time and the form of the
correction, interpretation or addition.
P 231
P 232
[A] Strictly Construed
The courts will strictly construe section 35. The arbitral tribunal will not be construed to
have any wider powers than are expressly provided for in section 35. This is confirmed by
the judgment of the High Court, in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd &
Another Case [2013] 4 CLJ 1172 at paragraph 52:
In any event I am of the view that the issue of ‘clarifications’ sought by the
respondent is totally misplaced as there is no provision in the Arbitration Act
2005 or the UNCITRAL Rules which provides for ‘clarifications’ of an award.
Sections 35(1)(a) and (b) of the Act only provides for the arbitrator to correct any
error in computation, any clerical or typographical error or other error of similar
nature or interpretation of a specific point of part of the award. This was not
what was sought by the respondent of the arbitrator.
This strict interpretation is in accordance with the purpose of sections 34 and 35, where the
mandate of the arbitral tribunal terminates with the final award being made save for
specific exceptions.

[B] Time
Time for the purpose of other provisions of the Arbitration Act 2005 will only start to run
from the date of disposal of a request for the correction, interpretation or addition. For
example, the ninety-day period for applying to set aside an award under section 37(a)
expressly only runs from the disposal of such a request under section 35. Although this is
not expressly provided for, in the context of a reference of questions of law under section
42(2), the High Court, in Kluang Health Care Sdn Bhd v. Lee Yong Beng & Another Case [2016]
1 CLJ 281 at paragraphs 43-46, confirmed that time would only start to run from the
disposal of such a request.

[C] Form
Any correction, interpretation or addition to the award must comply with the requirements
as to form and content in section 33. This is expressly provided for in section 35(7) of the
Arbitration Act 2005.

§35.02 CORRECTION
Section 35 of the Arbitration Act 2005 allows for the correction of an award. The section
only allows for the correction of errors, which include computational and clerical errors.
The type of error likely to be corrected under this section is an obvious error on the face of
the award.
Section 35 allows for such errors to be corrected upon request either by a party or by the
P 232 arbitral tribunal on its own initiative. Where an application is made by a party, the
P 233 application must be made within thirty days of receipt of the award. The arbitral

137
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 233
tribunal may then make the correction within thirty days of the request if it considers the
request justified. The arbitral tribunal may extend this period where it thinks it necessary.
Where the correction is made at the arbitral tribunal’s initiative, such correction must be
made within thirty days of the date of the award. The arbitral tribunal may extend this
period, where it thinks it necessary.
These provisions are non-derogable save that the parties may agree upon a different
period of time for the making of a request under section 35(1)(a) of the Arbitration Act 2005.
(37)

§35.03 INTERPRETATION
Section 35 allows for the interpretation of an award after it is made. This gave rise to
concern during the drafting of the 1985 Model Law that parties may attempt to revisit the
merits of the award and harass the arbitral tribunal in attempting to do so. There was also
concern about the finality of the award when a request was pending and the relationship
between such a request and an application to set aside.
On the other hand, it was argued that in international arbitration the award might be
written in a language other than an arbitrator’s mother tongue and this may give rise to
ambiguities that justify an interpretation. (38)
As a compromise, two restrictions are placed within section 35. First, a request may only be
made of a ‘specific point or part’ of an award. Second, a request may only be made with
the agreement of the other party.
Neither of these restrictions is found in Article 37 of the 2013 UNCITRAL Arbitration Rules,
which form part of the 2018 AIAC Arbitration Rules. However, as section 35(1)(b) of the
Arbitration Act 2005 is a non-derogable provision save for the time limit, it is submitted
that these two restrictions would apply even if the 2018 AIAC Arbitration Rules have been
agreed upon.
Section 35 allows for a request to be made with the agreement of the other party for an
interpretation of the award within thirty days of the receipt of the award. The arbitral
tribunal may then, if it considers the request justified, give the interpretation within thirty
days of receipt of the request. The arbitral tribunal may extend this period, where the
arbitral tribunal considers it necessary.
Section 35 does not allow for the arbitral tribunal to interpret the award on its own
initiative, unlike corrections to the award.

§35.04 ADDITIONAL AWARD

Section 35 allows for a party to request an additional award for claims that are omitted
P 233 from the award. Such a request must be made within thirty days. The arbitral tribunal then
P 234 has sixty days to make an additional award if it thinks the request justified. The arbitral
tribunal may extend this period, where it considers such an extension necessary.
A longer period is allowed for an additional award, as compared to a correction or
interpretation, as it is usually a more difficult and time-consuming process. (39)
Unlike the provisions governing requests for corrections and interpretations, the provisions
on additional awards are derogable. The parties are accordingly free to agree that the
arbitral tribunal shall not have the power to make an additional award. However, this may
result in the whole or part of the award being set aside. And, unlike the provisions on
corrections, the arbitral tribunal may not on its own initiative make an additional award.
P 234
P 235

36. An Award is Final and Binding

(1) An award made by an arbitral tribunal pursuant to an arbitration agreement shall be
final and binding on the parties and may be relied upon by any party by way of defence,
set-off or otherwise in any proceedings in any court.
(2) The arbitral tribunal shall not vary, amend, correct, review, add to or revoke an award
which has been made except as specifically provided for in section 35.

§36.01 INTRODUCTION
Section 36 of the Arbitration Act 2005 provides that an award shall be final, binding and
shall not be varied except in accordance with section 35.
There is no identical provision to section 36 in the 1985 Model Law, although elements of
section 36 can be seen in Articles 34(1) and 35(1).
Section 36 of the Arbitration Act 2005 is non-derogable. However, there is nothing to
prevent the parties from adding to this provision. This may be done by the adoption of
arbitration rules. For example, Rule 12(10) of the 2018 AIAC Arbitration Rules provides:
By agreeing to arbitration under the AIAC Arbitration Rules, the Parties
undertake to carry out the award immediately and without delay, and they also

138
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 irrevocably waive their rights to any form of appeal, review or recourse to any
court or other judicial authority insofar as such waiver may be validly made,
and the Parties further agree that an award shall be final and binding on the
Parties from the date it is made.
The extent to which such a provision may narrow or limit a party’s right of recourse against
an award is considered under §36.03 infra.

§36.02 FINAL AND BINDING

Section 36(1) of the Arbitration Act 2005 provides that an award shall be final and binding.
The courts recognize that under this provision there is to be minimal interference by the
courts and that there is to be no appeal against an award.
In this context, the High Court, in Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporation
Sdn Bhd [2010] 5 CLJ 83 at paragraph 33(c), held:
Taman says the arbitrator’s breach of natural justice and attitude of biasness
warrants the court not to register the award as judgment on the grounds of
public policy in reliance of s. 39(1)(b)(ii). And relies on pre-2005 cases which do
not deal with AA 2005. I will say AA 2005 makes it compulsory for courts to
respect the decision of arbitrators and only minimum intervention is allowed. In
this respect, it must not be forgotten that it is the parties who selected the
P 235 arbitrator and s. 36 of AA 2005 makes the award final, binding and conclusive.
P 236 And real proof is required to be shown before the court can meddle with the
award. In the past, it was easily meddled. No more under AA 2005, without
proof.
And, the High Court, in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Another Case
[2013] 4 CLJ 1172 at paragraphs 13 and 14, held:
[13] An award of the arbitrator made under the Arbitration Act 2005 is for all
intents and purposes final and binding. … .
[14] It is by and large immune from any interference by a court, much less to set
it aside unless it is infected with the infirmities identified in s. 37(1)(a)(i) to (vi)
and 37(1)(b) of the Arbitration Act 2005.
The High Court, in Sagau Batu Bala v. Zaharah Mustapha Raja Sewa & Anor And Other Cases
[2013] 10 CLJ 683 at paragraph 23, also held:
It is settled law that an arbitrator’s award is final, binding and conclusive and
can only be challenged in exceptional circumstances. Even if an arbitrator had
erred by drawing wrong inferences of fact from the evidence before him be it
oral or documentary, that in itself would not be sufficient to warrant the setting
aside of the award. The power to set aside an award under the Act can only be
exercised where the arbitrator has misconducted himself or the award has been
improperly procured … .
Further, the Court of Appeal, in Awangku Dewa Pgn Momin & Ors v. Superintendent of Lands
And Surveys, Limbang Division [2015] 3 CLJ 1 at paragraph 12, held:
There is a basic and important legislative policy codified in our Arbitration Act
2005, and that policy is that the award of an arbitrator is final and binding.
There is no recourse to a court of law by way of an appeal. This is clearly stated
by s. 36 of the Act … .
Subsequently, the Court of Appeal, in Antara Steel Mills Sdn Bhd v. CIMB Insurance Brokers
Sdn Bhd [2015] 5 CLJ 1018 at paragraphs 18-20, held:
[18] … Under the Arbitration Act, there is no right of appeal against the decision
of the arbitral tribunal. The decision of the arbitral tribunal is final, binding and
unappealable …
[19] Thus, there is nothing creative or innovative on the part of the parties when
they entered into an agreement at the commencement of the arbitration
proceedings to state that the award of the arbitral tribunal is final, binding and
unappealable. The parties are just restating what is already provided for in s. 36
of the Arbitration Act … .
[20] We do, however, note that the learned Judicial Commissioner has in her
grounds of judgment cited ss. 37 and 42 of the Arbitration Act as if these
provisions provide for an appeal against the award of the arbitral tribunal. We
do not propose to labour on these provisions. It is sufficient for us just to state
here that the learned Judicial Commissioner, with respect, was mistaken in her
grounds of judgment: these provisions do not provide for an appeal against the
award of an arbitral tribunal. Section 37 merely provides for an application to
the High Court by an aggrieved party to set aside the award of an arbitral
tribunal in the limited circumstances as specified by the section. And s. 42

139
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 236 merely provides for referral on a question of law to the High Court. For the sake
P 237 of completeness, we just wish to add that in any event, in the present case,
the defendant did not plead in its statement of defence that the plaintiff had
entered into an agreement with the insurer not to invoke either s. 37 or s. 42 of
the Arbitration Act; or that, based on the facts and the law (which the defendant
must explain in its pleading), the plaintiff could have successfully invoked
before the High Court (but failed to do so) either s. 37 or s. 42 of the Arbitration
Act to impugn the arbitral award.
The High Court, in Tanjung Langsat Port Sdn Bhd v. Trafigura Pte Ltd & Another Case [2016] 4
CLJ 927 at paragraphs 9(a) and (b), held:
(a) Section 36 of the AA 2005 provides that ‘An award made by an arbitral
tribunal pursuant to an arbitration agreement shall be final and binding
on the parties’. The court should be slow in interfering with an arbitral
award, which award can only be set aside under the limited circumstances
prescribed by s. 37 of the AA 2005 … .
(b) That a setting aside proceeding must never be in the nature of an appeal
ie, to guard against the danger of assuming the role of an appellate court
….
Finally, the Court of Appeal, in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd and another
appeal [2018] MLJU 968 at paragraph 30, inter alia, held:
We note that the court have had taken a minimalist intervention approach to
arbitral awards under the Act by virtue of section 36(1) of the Act which provides
that an arbitral award is final and binding on the parties … .

§36.03 AGREEMENT TO EXCLUDE RECOURSE

As referred to in §36.02 supra, the Court of Appeal, in Antara Steel supra, decided that the
mere repetition of the words in section 36 in an arbitration agreement would not prohibit
recourse to sections 37 and 42.
Similarly, the High Court, in Zenbay Sdn Bhd v. Yong Choo Kui Shipyard Sdn Bhd [2015] 10 CLJ
924 at paragraphs 40 and 41, considered an arbitration agreement that provided that the
award would be final and binding. The High Court decided, following Antara Steel supra,
that such a provision in an arbitration agreement would not prevent recourse under
sections 37 and 42 of the Arbitration Act 2005 for setting aside or a reference on a question
of law.
In Antara Steel and Zenbay supra, the arbitration clause merely repeated the provisions of
section 36(1) of the Arbitration Act 2005. However, Rule 12(10) of the 2018 AIAC Arbitration
Rules appears to go further and provides that the parties will carry out the award
immediately and waive their rights to any appeal, review or recourse to the courts.
Similarly, Article 35(6) of the 2017 ICC Rules of Arbitration provides:
Every award shall be binding on the parties. By submitting the dispute to
arbitration under the Rules, the parties undertake to carry out any award
without delay and shall be deemed to have waived their right to any form of
recourse insofar as such waiver can validly be made.
P 237
P 238
Neither the Arbitration Act 2005 nor the 1985 Model Law on which it is based provides for a
situation where the parties have excluded recourse against the award. The drafters of the
1985 Model Law did not contemplate such an exclusion. (40)
Section 29 of the Contracts Act 1950 provides:
Every agreement, by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract, by the usual legal
proceedings in the ordinary tribunals, or which limits the time within which he
may thus enforce his rights, is void to that extent.
Saving of contract to refer to arbitration dispute that may arise
Exception 1 — This section shall not render illegal a contract by which two or
more persons agree that any dispute which may arise between them in respect
of any subject or class of subjects shall be referred to arbitration, and that only
the amount awarded in the arbitration shall be recoverable in respect of the
dispute so referred.
Saving of contract to refer questions that have already arisen
Exception 2 — Nor shall this section render illegal any contract in writing, by
which two or more persons agree to refer to arbitration any question between
them which has already arisen, or affect any law as to references to arbitration.
Exception 3 — Nor shall this section render illegal any contract in writing

140
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 between the Government and any person with respect to an award of a
scholarship by the Government wherein it is provided that the discretion
exercised by the Government under that contract shall be final and conclusive
and shall not be questioned by any court.
In this exception, the expression ‘scholarship’ includes any bursary to be
awarded or tuition or examination fees to be defrayed by the Government and
the expression ‘Government’ includes the Government of a State.
In the light of exceptions 1 and 2 to section 29 of the Contracts Act 1950, an arbitration
agreement restricting the parties’ rights to seek recourse from the courts will not be void.
This was confirmed by the Court of Appeal, in Dancom Telecommunication (M) Sdn Bhd v.
UniAsia General Insurance Bhd [2008] 5 CLJ 551 at paragraph 22, where it was, inter alia,
held:
The bringing of an action in an ordinary court of law is readily distinguishable
from a reference of a dispute to arbitration. A contract which incorporates an
arbitration clause, such as cl. 14, to refer the parties’ dispute to arbitration
within a specified period as agreed by the parties, is a contract sui generis. The
hallmark of arbitration is characterised by the autonomy of the parties. By way
of agreement, the parties have an unfettered choice, not only to refer their
dispute to arbitration and to choose their own arbitrators or umpires, but also
to prescribe the time frame for such reference. Their intention is to sustain the
mechanism of alternative dispute resolution by way of arbitration and not court
action. Their desire is to place arbitration under their exclusive control. They
P 238 hope to achieve eg, speed in the hearing and determination of their dispute.
P 239 Different considerations would then apply to an arbitration clause
prescribing a time frame such as that expressly agreed in cl. 14. It is a product
of the doctrine of freedom of contract and would attract the application of the
specific provisions expressly set out in exceptions 1 and 2 to s. 29, so that the
general rule embodied in s. 29 would give way to these two exceptions.
The issue is, therefore, whether such an exclusion may be interpreted by the courts as
being contrary to the Arbitration Act 2005 and therefore, unenforceable. In this regard, the
Arbitration Act 2005 to a limited extent allows the parties to exclude certain recourse to
the courts. Section 3 of the Arbitration Act 2005 allows for the exclusion of the application
of Part III of the Act. Part III includes provisions allowing recourse to the courts, such as
section 42, which allows for a reference of a question of law.
Therefore, as an exclusion of recourse to the courts is in principle allowed by the
Arbitration Act 2005, there is no reason why this principle should not also enable the
parties to exclude recourse in terms of an application to set aside an award.
It is submitted that parties should be entitled to exclude recourse to the courts against an
award. The parties are free to exclude access to the first instance court to determine the
dispute and should similarly be free to exclude recourse to the courts against an award.
(41) This is in line with the principle of party autonomy.
Furthermore, one of the primary reasons parties agree to arbitration is to avoid the cost,
delay and risks of the courts. This reason will be defeated if parties are prohibited from
excluding recourse to the courts against an award. (42) Although it is submitted that the
parties should be free to exclude recourse against the award, it is acknowledged that this
exclusion should not be absolute. Section 37(1)(b) of the Arbitration Act 2005 would not be
excluded by an exclusion provision similar to the one in the ICC or KLRCA Arbitration Rules.
This is due to two reasons. First, section 37(1)(b) allows the courts to act on their own
initiative. Second, section 37(1)(b) provides for fundamental issues like arbitrability and
public policy, which cannot be derogated from.

§36.04 RES JUDICATA

Section 36(1) of the Arbitration Act 2005 provides that an award is final and binding and
may be relied on by the parties by way of defence, set-off or otherwise in any proceedings
in any court. The words used in this provision suggest that a party may broadly rely on an
award in any future proceedings.
The courts appear to be prepared to give effect to the broad meaning of the provision.
P 239 The High Court, in Skylark Jaya Sdn Bhd & Ors v. Pengarah Tanah Dan Ukur, Jabatan Tanah
P 240 Dan Ukur, Sabah & Ors [2011] 1 LNS 578 at pages 15-17, accepted that by virtue of section
36 an award might be used to contend that subsequent proceedings are res judicata. This
position may even be taken where the subsequent proceedings are between different
parties provided that the cause of action was the same.
Subsequently, the Court of Appeal, in Tipco Asphalt Public Company Ltd & Anor v. Aras
Jalinan Sdn Bhd & Other Appeals [2013] 8 CLJ 498 at paragraphs 35-37, while declining to
decide the issue on an interlocutory appeal, appeared to accept that it would at least be
arguable that findings of fact made in an award would be res judicata in subsequent
proceedings.
P 240

141
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 240

References
1) See Analytical Commentary, Article 28, commentary 4; UNCITRAL Report, para. 232.
2) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.008.
3) See Analytical Commentary, Article 28, commentary 4.
4) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.010.
5) See UNCITRAL Report at para. 237.
6) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.012.
7) See UNCITRAL Report at para. 237.
8) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.015.
9) See Kerajaan Malaysia (Kementerian Sumber Asli dan Alam Sekitar) v. Kumpulan Sakata
Sdn Bhd [2016] 7 CLJ 412 at paras 16, 24, HC; Kerajaan Malaysia v. Tasja Sdn Bhd [2016] 6
CLJ 738 at para. 52, HC.
10) See UNCITRAL Report para. 238.
11) See UNCITRAL Report para. 244.
12) See Analytical Commentary, Article 29, commentary 2.
13) See UNCITRAL Report para. 246.
14) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.035.
15) See Analytical Commentary, Article 30, commentary 2.
16) See UNCITRAL Report para. 250.
17) See Analytical Commentary, Article 30, commentary 2; UNCITRAL Report para. 249.
18) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.072.
19) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.060; Analytical
Commentary, Article 31, commentary.
20) See Analytical Commentary, Article 31, commentary 1.
21) See Analytical Commentary, Article 31, commentary 1.
22) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at paras 6.060 and 6.061.
23) See Analytical Commentary, Article 31, commentary 2.
24) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at paras 6.059.
25) See Analytical Commentary, Article 31, commentary 3.
26) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.063.
27) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.063.
28) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.066.
29) See UNCITRAL Report at para. 254.
30) See Analytical Commentary, Article 31, commentary 5.
31) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.066.
32) See Analytical Commentary Article 31, commentary 6.
33) See Lian Hup Manufacturing Co Sdn Bhd v. Unitata Bhd [1994] 3 CLJ 338; Raja Lope & Tan
Co v. Malayan Flour Mills Bhd [2000] 6 CLJ 194; Shamelin Holdings Sdn Bhd v. Mohd
Anuar Ahmad [2006] 8 CLJ 622; Leong Kum Whay v. QBE Insurance (M) Sdn Bhd [2006] 1
CLJ 1.
34) See Analytical Commentary, Article 32, commentaries 1 and 2.
35) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.066.
36) See UNCITRAL Report at para. 262.
37) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 6.103.
38) See UNCITRAL Report at paras 266, 267.
39) See Analytical Commentary, Article 33 commentary 2.
40) See Gary B. Born, International Commercial Arbitration (2nd edn, Kluwer Law
International 2014) Vol III at §25.07[A][1].
41) See Gary B. Born, International Commercial Arbitration (2nd edn, Kluwer Law
International 2014) Vol III at §25.07[A][1].
42) See Gary B. Born, International Commercial Arbitration (2nd edn, Kluwer Law
International 2014) Vol III at §25.07[A][1].

142
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 143
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 7: Recourse Against Award
Publication 37. Application for Setting Aside
Arbitration in Malaysia: A (1) An award may be set aside by the High Court only if –
Commentary on the
Malaysian Arbitration Act (a) the party making the application provides proof that –
(i) a party to the arbitration agreement was under any incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties
Jurisdiction have subjected it, or, failing any indication thereon, under the laws of
Malaysia Malaysia;
(iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was otherwise
Bibliographic reference unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within the
'Chapter 7: Recourse Against terms of the submission to arbitration;
Award', in Thayananthan
Baskaran , Arbitration in (v) subject to subsection (3), the award contains decisions on matters beyond
Malaysia: A Commentary on the scope of the submission to arbitration; or
the Malaysian Arbitration (vi) the composition of the arbitral tribunal or the arbitral procedure was not in
Act, (© Kluwer Law accordance with the agreement of the parties, unless such agreement was in
International; Kluwer Law conflict with a provision of this Act from which the parties cannot derogate,
International 2019) pp. 241 - or, failing such agreement, was not in accordance with this Act; or
266 (b) the High Court finds that –
(i) the subject matter of the dispute is not capable of settlement by arbitration
under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
(2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the
public policy of Malaysia where –
(a) the making of the award was induced or affected by fraud or corruption; or
P 241
P 242 (b) a breach of the rules of natural justice occurred –
(i) during the arbitral proceedings; or
(ii) in connection with the making of the award.
(3) Where the decision on matters submitted to arbitration can be separated from those
not so submitted, only that part of the award which contains decisions on matters not
submitted to arbitration may be set aside.
(4) An application for setting aside may not be made after the expiry of ninety days from
the date on which the party making the application had received the award or, if a
request has been made under section 35, from the date on which that request had been
disposed of by the arbitral tribunal.
(5) Subsection (4) does not apply to an application for setting aside on the ground that the
award was induced or affected by fraud or corruption.
(6) On an application under subsection (1) the High Court may, where appropriate and so
requested by a party, adjourn the proceedings for such period of time as it may
determine in order to allow the arbitral tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the arbitral tribunal’s opinion will
eliminate the grounds for setting aside.
(7) Where an application is made to set aside an award, the High Court may order that any
money made payable by the award shall be brought into the High Court or otherwise
secured pending the determination of the application.

§37.01 INTRODUCTION
Section 37 of the Arbitration Act 2005 provides for the grounds for setting aside an award,
as well as, the time for making such an application and the security that may be required.
Section 37 of the Arbitration Act 2005 is based on Article 34 of the 1985 Model Law with
certain amendments:
(1) Article 34(1) of the 1985 Model Law is omitted from section 37 of the Arbitration Act
2005;
(2) sections 37(1) and (3) of the Arbitration Act 2005 reflect Article 34(2) of the 1985 Model
Law;
(3) section 37(2) of the Arbitration Act 2005 is not found in the 1985 Model Law;
(4) section 37(4) of the Arbitration Act 2005 is based on Article 34(3) of the 1985 Model
Law;
(5) section 37(5) of the Arbitration Act 2005 is an addition that is not found in the 1985

144
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Model Law;
(6) section 37(6) is based on Article 34(4) of the 1985 Model Law; and
(7) section 37(7) of the Arbitration Act 2005 is an addition that is not found in the 1985
Model Law.
P 242 The grounds for setting aside in section 37 reflect the grounds for refusing recognition of an
P 243 award in section 39 of the Arbitration Act 2005. The grounds for refusing recognition of an
award in turn reflect Article V of the 1958 New York Convention. Section 37 reflecting Article
V of the New York Convention is intentional and is for the sake of harmony in
interpretation.
Section 37’s origins in Article 34 of the 1985 Model Law which in turn reflects Article V of the
1958 New York Convention has been recognized by the High Court, in The Government of
India v. Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149 at paragraphs 101-103.
Similarly, the Court of Appeal, in Garden Bay Sdn Bhd v. Sime Darby Property Bhd [2017] 2
MLJ 636 at paragraph 8, inter alia, held:
Malaysia has adopted the Model Law (which has subsumed part of the
Convention) for domestic as well as international arbitration. The Convention
does not allow an arbitral award to be set aside for error of fact and/or law. The
Convention only allows an award to be challenged for one of the grounds set out
in article I-V and in particular V … .
Section 37 is one of the provisions of the Arbitration Act 2005 that has been subjected to
the most consideration by the courts. The provision has been considered in minute detail.
These details are considered in this chapter.

§37.02 AN AWARD MAY BE SET ASIDE BY THE HIGH COURT ONLY IF …

Section 37(1) of the Arbitration Act 2005 is of particular importance as it set outs a general
precondition for the setting aside of an award. Given the importance of this provision, each
of its terms will be examined below.

[A] Award
The word ‘award’ is defined by section 2(1) of the Arbitration Act 2005 to mean:
‘award’ means a decision of the arbitral tribunal on the substance of the
dispute and includes any final, interim or partial award and any award on costs
or interest but does not include interlocutory orders;
Therefore, only a final, interim or partial award on the substance of the dispute, costs or
interest may be set aside. Interlocutory orders may not be set aside. This definition of an
‘award’ is not contained in the 1985 Model Law. The inclusion of this definition in the
Arbitration Act 2005 clarifies the type of decisions by the arbitral tribunal that may be set
aside.
Section 37 when referring to an award does not expressly refer to an award from a foreign
state or an award from any State. In this way, section 37 differs from sections 38 and 39,
which do refer to an award made in a foreign or any State.
This difference has been interpreted by the High Court, in Twin Advance (M) Sdn Bhd v.
Polar Electro Europe BV [2013] 3 CLJ 294 at paragraphs 27 and 28 to mean that an
P 243 application may only be made to the High Courts of Malaysia to set aside an award arising
P 244 from an arbitration with a seat in Malaysia. This is also in accordance with section 3 of
the Arbitration Act 2005 and international arbitration practice that an application to set
aside an award should be made at the seat of the arbitration.

[B] May
Section 37(1) provides that the High Court ‘may’ set aside an award if the grounds specified
in section 37(1)(a) or (b) are satisfied.
The High Court, in The Government of India supra, interpreted this to mean that the courts
have a discretion as to whether to set aside an award even if the grounds in section 37(1)(a)
or (b) are satisfied. In this regard, the High Court in The Government of India supra at
paragraph 120, inter alia, held:
From the terms of these subparas, it is evident that the court is here vested with
discretion to intervene in the award. Sub-section 37(1) uses the word ‘may’ as
opposed to the word ‘shall’, the latter often treated as mandatory in its dictate
and application. See for example, ss 8, 10 and 41(2) in Act 646.
This was again emphasized by the High Court, in Intraline Resources Sdn Bhd v. ExxonMobil
Exploration and Production Malaysia Inc [2017] MLJU 1299 at paragraph 26(j):
The language of Section 37(1), specifically on the use of the word ‘may’ firmly
confers on the Courts the discretion in the exercise of its powers to set aside

145
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitration awards … .
The judgment of the High Court, in The Government of India supra, was followed by the High
Court in The Government of India v. Vedanta Ltd (legal successor of Cairn India Ltd) & Anor
[2018] MLJU 630 at paragraphs 66, 68 and 72. The High Court further explained that the
discretion would be exercised based on the materiality of the outcome or prejudice, which
would have to be proved by the applicant:
[66] Even if the complaint is demonstrated to fall within the ambit of the
specific provisions of section 37, the Court retains a discretion over whether to
set aside an award or not.
…
[68] Thus it has been stated that the materiality of the outcome of the violation
complained of is an important factor in the Court’s exercise of discretion to set
aside an award … .
…
[72] The party alleging prejudice bears the burden to prove it … .
However, the Court of Appeal, in Sigur Ros Sdn Bhd v. Master Mulia Sdn Bhd [2018] 3 MLJ 608
at paragraphs 63 and 64, clarified that while the court had a discretion whether to set
aside an award, which involved an evaluation of the materiality of a breach, this did not
P 244 mean that prejudice must be shown or that the applicant bore the burden of proving such
P 245 prejudice:
[63] Because section 37 vests the Court with a wide discretion on whether to set
aside an award, we agree with the learned JC that the decision to set aside an
award is not an automatic outcome of a finding that there has been a breach of
the rules of natural justice. The Court will still have to evaluate whether
discretion should be exercised in the applicant’s favour. In considering whether
discretion should be exercised, there should be an evaluation of relevant
factors such as those identified in Kyburn Investments Ltd v Beca Corporate
Holdings Ltd, amongst which would be to consider the seriousness, magnitude or
materiality of the breach, its nature and its impact, whether the breach would
have any effect on the outcome of the arbitration; leaving room for ‘casual
breach or occasional error’. Costs of rehearing and delay in raising the
complaint are further relevant factors to be taken into account in that
evaluation. This exercise is different from undertaking an exercise to show
prejudice, which may be in several respects, including monetary rights.
[64] There is however, no question of there being an onus cast on the applicant
to establish these factors … .
Significantly, the Court of Appeal, in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd and
another appeal [2018] MLJU 968 at paragraph 38, decided in the context of a breach of the
rules of natural justice that once a ground for setting aside is established, the courts’
discretion not to set aside the award is narrow and depends on materiality:
We note that if there is a breach of the rules of natural justice, the discretion not
to set aside the Award is a very narrow one, and that too if the breaches are not
material … .
It is settled that the courts have a discretion whether to set aside an award once it is
proved that a ground for setting aside exists. The courts exercise their discretion by
evaluating the materiality of the ground for setting aside. The applicant does not bear the
burden of proving materiality or prejudice. Once a ground is proved, the courts’ discretion
is limited and depends on the materiality of the ground.

[C] Set Aside

Section 37 of the Arbitration Act 2005 provides for the setting aside of an award and not an
appeal against the award. This has been emphasized by the courts in the context of section
36, as discussed under §36.02 supra.
In addition, in relation to section 37, the High Court, in The Government of India supra at
paragraph 171, held that:
… the court’s powers are not invoked in the field of appellate jurisdiction. The
court’s powers here are specifically enacted under statute. Since the court does
not sit in appellate capacity, the court does not scrutinise the merits of the
parties’ respective case or responses before the arbitral tribunal. The court
must also resist interfering in the decisions of the arbitral tribunal save where it
is prescribed under the Arbitration Act 2005.
P 245
P 246 The High Court, in Intraline supra at paragraphs 26(a)-(g), further elaborated that:
In my view, the following key principles, as distilled from a number of decisions

146
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 here and from other common law jurisdictions applying the Model Law,
presently represent the law on the setting aside of arbitration awards under
Section 37 of the AA.
(a) The Courts should be slow in interfering with an arbitral award unless
there is patent injustice … .
(b) Constant judicial interference as was the case in the past will defeat the
spirit of the Arbitration Act 2005 to promote one-stop adjudication in line
with international practice … .
(c) An arbitration award is final, binding and conclusive; and it can only be
challenged in exceptional circumstances. Erroneous drawing of inferences
of fact from the evidence in itself is not sufficient for the setting aside of
the award …
(d) It is not the function of the Court to examine the correctness of the award
on merits … .
(e) Section 37 is not an appellate provision; the Court must not sit in appeal
over the view of the arbitrator by re-examining and re-assessing the
materials before him …
(f) The philosophy of party autonomy and party choice means that a
challenge is not permitted to be premised on a party’s change of mind by
extricating from its agreement to final and binding arbitration … .
(g) The Courts should approach arbitration awards commercially and
reasonably and expect no substantial fault in the same … .
Similarly, the High Court, in Vedanta supra at paragraph 64, held:
1. No Appeal/Review on the Merits
Section 37 is not an appellate provision … .
2. No ‘Hole Picking’
Secondly the Courts are to generally read the award expansively with an
expectation that it is free from substantial fault.
Section 37 also does not allow the High Court to vary an award. This was recognized by the
Court of Appeal, in Petronas Penapisan (Melaka) Sdn Bhd v. Ahmani Sdn Bhd [2016] 3 CLJ 403
at paragraph 20, where it was, inter alia, held:
The powers to remit or set aside is found in ss. 23 and 24 of the AA 1952 though
there is no power to vary the award in those two sections. The power to do so is
not restricted by any grounds as set out in ss. 37 or 42 of the AA 2005. Section 37
does not give the court the power to vary, even though it can remit or set aside
the award. Section 42 gives the court power to remit, vary or set aside. One
common thread in the old regime as well as ss. 37 and 42 is the requirement to
remit the award. In the instant case, no attempt was made to remit the award to
the arbitrator.
Further, the High Court may only set aside an award on an application by the applicant
and cannot enter a judgment in on the terms prayed for. This was confirmed by the High
P 246 Court, in Konsortium Lord-Saberkat Sdn Bhd v. RP Chemicals (M) Sdn Bhd [2018] MLJU 602 at
P 247 paragraph 26:
In this respect, I am in agreement with learned counsel for the Defendant that s.
37 of the AA 2005 only provides this court with the discretionary power to set
aside the Final Award in the event the statutory requirements are met. The said
s. 37 does not empower this court, in the event the Final Award is set aside, to
grant judgment in favour of the Plaintiff for the monetary claims it had sought in
OS 8 which is the same prayers it sought in the arbitration proceedings. If the
Final Award is set aside the matter would have to be re-arbitrated. In other
words this court has no power to substitute the decision of the Arbitrator with a
decision of this court … .

[D] High Court

Section 37(1) specifically provides that the ‘High Court’ may set aside an award. The words
‘High Court’ are defined by section 2(1) of the Arbitration Act 2005 to mean:
‘High Court’ means the High Court in Malaya and the High Court in Sabah and
Sarawak or either of them, as the case may require …
Therefore, an application to set aside an award must be made to the High Court, as the
subordinate courts do not have the power to set aside an award. (1)

[E] Only If
Section 37(1) of the Arbitration Act 2005 provides that the High Court may set aside an

147
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 award ‘only if’ the grounds in section 37(1)(a) or (b) are satisfied.
First, this requires the applicant to specify the particular ground in section 37(1)(a) or (b)
they rely on, as it is only if such a ground is established that the High Court may set aside
an award. The importance of the applicant specifying the grounds relied on has been
emphasized by the High Court.
For example, the High Court, in Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporations
Sdn Bhd [2010] 5 CLJ 83 at paragraphs 15 and 16, held:
[15] In the instant case, the plaintiff is relying on ss. 37 and 42 of AA 2005 without
stating the sub-section. This is fatal because ss. 37 and 42 spell out different
maladies and relief in a very restrictive manner. Order 7 makes it mandatory for
the originating summons to be intituled by the particulars of the rule of court
and the provisions of the relevant laws the court is moved … .
[16] It is clear the plaintiff has clearly failed to state with sufficient particularity
the relevant sub-section of the statute which in this case is of utmost
importance. The failure results in embarrassment as adumbrated by the Court
of Appeal. This is so for various reasons: (a) Section 8 of AA 2005 makes it clear
that court can only intervene in any of the matters governed by the Act, thereby
restricting the scope of intervention to the approved issues only. (b) The reading
of s. 37 will show that in a restricted manner, there are number of instances the
P 247 court can intervene and that intervention is subject to proof provided. (c) The
P 248 subsection to s. 37 is not inter-related as a whole and almost in all cases
stands independent to one another. In consequence, the plaintiff is obliged to
set out the subsection it relies upon, failing which the intitulement stands as
embarrassing and ought to be struck out in limine.
Similarly, the High Court, in Perembun (M) Sdn Bhd v. Binas BMK Sdn Bhd and another case
[2015] MLJU 0283 at paragraph 38, held:
… I am of the opinion that Perembun should nevertheless identify the precise
provision of law that affords that particular ground or basis of challenge that it
relies on to set aside the Corrective Award; or how the reasons or complaints
come within the particular ground in subsection 37(1) that is relied on. It is only
fair and proper that the precise ground should be identified at the time of
challenge; and not left for all to guess at or during the hearing of the Originating
Summons. Here, the absence of such an invocation has caused some difficulties
in discerning what is precisely Perembun’s complaints.
In particular, the Court of Appeal, in Sigur Ros supra at paragraph 24, explained that the
grounds in sections 37(1)(a) and (b) should be read disjunctively but may be relied on
cumulatively:
First, sections 37(1) (a) and (1) (b) are disjunctive provisions in that an award may
be set aside under any of these provisions. Within sections 37(1)(a) and (1)(b) are
further sub-provisions providing for the various grounds upon which an award
may be set aside. These grounds may be relied on cumulatively or otherwise.
Second, in the light of the use of the words ‘only if’ and the provisions of section 8 of the
Arbitration Act 2005, the courts will adopt a minimalist approach and strictly construe
whether the grounds relied on by a party conform with section 37(1)(a) or (b). (2) The
minimalist approach adopted by the courts in this regard has been considered in §8.03[F]
supra.
However, these authorities must now be read in the light of the judgment of the Federal
Court, in Far East Holdings Sdn Bhd v. Majlis Ugama Islam dan Adat Resam Melayu Pahang
[2017] 8 AMR 313 at paragraph 66, which held that the words of section 42 should be read as
they stand without additional requirements. A similar approach should, it is submitted, be
adopted in relation to section 37.

§37.03 THE PARTY MAKING THE APPLICATION PROVIDES PROOF

The grounds for setting aside an award are divided into two. There are six grounds on which
a party may make an application, and there are two grounds on which the court may act on
its own initiative. These grounds are set out in sections 37(1)(a) and (b) respectively.
The first six grounds under section 37(1)(a) require the applicant to provide proof. As
discussed under §37.02[E] supra, an applicant must specify the ground relied on in section
37(1)(a) and prove such ground.
P 248
P 249
The standard of proof required is on a balance of probability. As discussed under §37.02[E]
supra, only if the ground the applicant has specified and relied on is proved on a balance
of probability, can the court exercise its discretion to set aside an award.
The need for proof has been repeatedly emphasized by the High Court. For example, in
Taman Bandar Baru Masai supra at paragraph 23(b), the High Court held that ‘general

148
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 allegations are not sufficient as it is a mandatory requirement for need of proof.’ This was
subsequently followed in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Another Case
[2013] 4 CLJ 1172 at paragraphs 18-20.
The High Court, in The Government of India supra at paragraphs 125 and 126, dwelt on the
need for proof and the standard proof required, as well as, it being a precondition for the
exercise of the court’s discretion:
[125] I find further support of this view in the requirement of ‘proof’ as opposed
to there being none called for; or a requirement on a lower evidentiary
threshold when dealing with a challenge under sub-paras 37(1)(a)(iv) and (v). The
choice of this word is deliberate. It is also a stringent requirement of the
sufficiency of evidence that must be brought before the court. As compared to
the phrase ‘appear’ which is used in some legislations (see for example s 360 of
the Capital Markets and Services Act 2007 (Act 671) where a lower standard of
proof is required, the deliberate choice of the word ‘proof’ indicates that there
must be certainty in proof.
[126] Insofar as the standard of proof is concerned, it must be on the civil
balance of probabilities; and not the higher burden of beyond reasonable
doubt. It is only where the court is satisfied that there is evidence certain of the
matters alleged that the court has discretion to intervene for the purposes of
setting aside the award. Where the court is not satisfied, it may be argued that
there is no discretion at all. Again, this would be due to the presence of the
clear emphatic words of ‘only if’.
This was subsequently reiterated in Kluang Health Care Sdn Bhd v. Lee Yong Beng & another
Case [2016] 1 CLJ 281 at paragraphs 33 and 34 and Intraline Resources supra at paragraph
26(i). The Court of Appeal, in Sigur Ros supra at paragraphs 25 and 39, emphasized the need
to prove the grounds relied on by a party under section 37 on a balance of probabilities.
The applicants must accordingly prove the grounds they rely on on a balance of
probability. The substance of the six grounds under section 37(1)(a) is considered below.

[A] Incapacity of a Party

An award may be set aside if it is proved that a party to the arbitration agreement was
under an ‘incapacity’.
The meaning of ‘incapacity’ in Malaysia will be determined based on sections 10-12 of the
Contracts Act 1950, which provide:
10. What agreements are contracts
(1) All agreements are contracts if they are made by the free consent of
parties competent to contract, for a lawful consideration and with a lawful
object, and are not hereby expressly declared to be void.
P 249
P 250
(2) Nothing herein contained shall affect any law by which any contract is
required to be made in writing or in the presence of witnesses, or any law
relating to the registration of documents.
11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to
the law to which he is subject, and who is of sound mind, and is not disqualified
from contracting by any law to which he is subject.
12. What is a sound mind for the purposes of contracting
(1) A person is said to be of sound mind for the purpose of making a contract
if, at the time when he makes it, he is capable of understanding it and of
forming a rational judgment as to its effect upon his interests.
(2) A person who is usually of unsound mind, but occasionally of sound mind,
may make a contract when he is of sound mind.
(3) A person who is usually of sound mind, but occasionally of unsound mind,
may not make a contract when he is of unsound mind.
ILLUSTRATIONS
(a) A patient in a mental hospital, who is at intervals of sound mind, may
contract during those intervals.
(b) A sane man, who is delirious from fever, or who is so drunk that he cannot
understand the terms of a contract, or form a rational judgment as to its
effect on his interests, cannot contract whilst such delirium or
drunkenness lasts.
Therefore, a party will be under an incapacity if they: (3)
(1) are not acting with their free consent;

149
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (2) have not attained the age of majority;
(3) are of unsound mind; or
(4) are disqualified from contracting.
Apart from this, the question arises under the law of which State will the incapacity of a
party be determined in an international arbitration. There is no authority in Malaysia as to
which State’s law will be applied in this situation.
It is submitted that the capacity of an individual to enter into a contract will be governed
by the law of the State with which the arbitration agreement is most closely connected or
the law of his domicile and residence. If he has the capacity to contract under either the
law of the State with which the arbitration agreement is most closely connected or the law
of his domicile and residence, the arbitration agreement will be valid.
If he does not have the capacity to contract under either the law of the State with which
the arbitration agreement is most closely connected or the law of his domicile or
residence, the arbitration agreement will be invalid. (4)
P 250
P 251
[B] Validity of the Arbitration Agreement
An award may be set aside where an arbitration agreement is proved to be invalid under
the law, which governs it. If the law which governs the arbitration agreement is Malaysian
law, then the question of whether there is a valid arbitration agreement will be
determined in accordance with section 9 of the Arbitration Act 2005, which is considered in
§9.01 to §9.03 supra.
The question arises as to which State’s law will determine the validity of the arbitration
agreement in an international arbitration. Section 37(1)(a)(ii) of the Arbitration Act 2005
addresses this question by providing that the law which will determine the validity of the
arbitration agreement will be:
(1) the law the parties have subjected the arbitration agreement to;
(2) the law the parties have indicated should apply to the arbitration agreement; or
(3) the laws of Malaysia, if there is no such indication.
This follows Article 34(2)(a)(i) of the 1985 Model Law. Paragraph (1) above provides for a
situation where the parties have expressly provided for the law which is to govern the
arbitration agreement. Paragraph (2), it is submitted, covers a situation where the parties
have implicitly agreed on the law that is to govern the arbitration agreement. Paragraph
(3) covers the default situation, where there has been no express or implied agreement on
the law which is to govern the arbitration agreement, in which event the laws of Malaysia
apply.
The Federal Court, in Thai-Lao Lignite Co Ltd v. Government of the Lao People’s Democratic
Republic [2017] 6 AMR 219, considered a project development agreement, which expressly
provided that the laws of the Lao People’s Democratic Republic and New York were to
govern the substantive contract. The parties did not expressly agree on the laws that were
to govern the arbitration clause within the project development agreement. The
arbitration clause provided for the application of the UNCITRAL Arbitration Rules, that
Kuala Lumpur was to be the seat of arbitration and that the arbitral tribunal should be
trained in the laws of New York.
The Federal Court held that the question of which law governed the arbitration agreement
was not a choice between the law of the contract and law of the seat. Rather, the question
was to be determined by conflict of law rules, that is the law which had the closest
connection with the arbitration agreement was to govern it.
The Federal Court held that the laws of Malaysia had the closest connection to the
arbitration agreement, as the arbitration was seated in Kuala Lumpur, with the Arbitration
Act 2005 as the curial law. The Federal Court, in Thai-Lao Lignite supra at paragraph 187,
held:
Under the conflict of laws rules, the law that has the closest and most real
connection to the arbitration agreement is the law applicable to the arbitration
agreement. In the instant case, the arbitration was conducted in Malaysia at the
Kuala Lumpur Regional Centre for Arbitration. Since the arbitration was
P 251 conducted in Malaysia, AA 2005 (with the exception of Part III) was the lex
P 252 arbitrii. Since the seat was Kuala Lumpur, AA 2005 was also the curial law …
AA 2005 was the lex arbitrii and the curial law. That pointed to the law of
Malaysia with the closest connection to the arbitration agreement. New York
law had no connection to the arbitration agreement. The PDA required the
arbitral tribunal to be trained in New York law. But that was because New York
law governed the substance of the dispute. The parties submitted on New York
law. But that was to address the third party beneficiary issue. Only the law of
Malaysia had the connection, the closest and most real at that, to the
arbitration agreement. Under the conflict of laws rules, the law applicable to
the arbitration agreement should be the law of Malaysia. That conclusion on the

150
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 applicable law should be the same even if the three stage test espoused in
Sulamerica were applied, as the parties’ adoption of the UNCITRAL Arbitration
Rules 1976 implied a choice of the law applicable to the seat. There was a tacit
choice of Malaysian law to govern the arbitration agreement. Malaysian law,
namely ordinary contract law principles, would govern the interpretation of the
arbitration agreement … .

[C] Lack of Notice or Inability to Present Case

An award may be set aside if a party is able to prove that they were given insufficient
notice or were otherwise unable to present their case. This will amount to a breach of the
statutory obligation to give each party a fair and reasonable opportunity to be heard
under section 20 of the Arbitration Act 2005, which has been considered under §20.01-
§20.04 supra.

[D] Excess of Jurisdiction

[1] General
An award may be set aside if it exceeds the scope of the submission to arbitration. Where
the decisions on matters within the scope of the submission to arbitration can be separate
from matters outside the scope, only that part of the award that includes matters outside
the scope of the arbitration needs to be set aside.
The reason for this is party autonomy. Parties are free to agree on the matters referred to
arbitration. Parties are bound by this agreement. Conversely, parties are not bound by an
award that is in excess of the reference to arbitration.
This was lucidly explained by the Court of Appeal, in Kerajaan Malaysia v. Perwira Bintang
Holdings Sdn Bhd [2015] 1 CLJ 617 at paragraph 22, where it was, inter alia, held:
… This is an area of arbitration law which allows the court to set aside an award
on the ground that an arbitrator had decided on a ‘new difference’ which is
irrelevant to the claim, the ‘new difference’ being understood as a new dispute
not contemplated by or not falling within the terms of the arbitration
submission. The underlying rationale for this rule rests on the consensual nature
of arbitration. Parties are not compelled to resort to arbitration contractually,
but if they provide for it and refer their dispute to arbitration, the mandate of
P 252 the arbitrator must be limited to the terms defined by the parties for him to
P 253 exercise his jurisdiction. If the arbitrator strays from the confines of this
mandate, he will be acting in excess of his jurisdiction, even though he may
have the initial and primary jurisdiction to arbitrate between the parties … .
The High Court, in The Government of India supra at paragraph 129, explained that one must
start with the assumption that the arbitral tribunal has substantive jurisdiction and then
consider how this jurisdiction may have been exceeded:
As discussed, a challenge under sub-paras 37(1)(a)(iv) and (v) must start with the
assumption that the arbitral tribunal has substantive jurisdiction in the first
place; and the complaint is that the arbitral tribunal exceeded its powers by
dealing with matters that had not been submitted to the tribunal. From the
submissions and the cause papers, it would appear that the plaintiff is not
suggesting otherwise.
[2] The Test
The test to determine whether the award exceeds the arbitral tribunal’s discretion focuses
on the arbitration agreement, the terms of reference and the provisions of the Arbitration
Act 2005 and assesses whether the scope thereby ascertained has been exceeded.
This was explained by the High Court, in The Government of India supra at paragraphs 138
and 139, and 161, 165, where it was also clarified that the law to determine jurisdiction is
the law of the arbitration agreement and not the law of the substantive contract:
[138] The areas of intense focus identified by Lord Steyn, namely the arbitration
agreement, the terms of reference, the relevant Act, must necessarily be true for
the determination of a challenge of excess of jurisdiction or power since the
arbitral tribunal takes its mandates from such sources.
[139] Further, it must be remembered that the courts tend to construe
arbitration cls or agreements widely … .
[161] Although Indian law is the substantive law or proper law of the contract or
PSC, and English law is the law of the arbitration agreement; that in no way
means that Indian lex arbitrii applies on the determination of an application
under s 37.
…
[165] … I agree with the defendants that English law which is the substantive law
of the arbitration agreement answers any questions on the jurisdiction of the

151
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitral tribunal … .
The test was summarized and clearly stated by the High Court, in Intraline Resources supra
at paragraph 26(m):
To succeed in a case under Section 37(1)(a)(iv) and (v) for excess of power or
mandate, the correctness of the decision is also not relevant. The applicant
must first show the matters which are within the scope of the submission to
arbitration. It then must prove that the award deals with a ‘new difference’
which is not within the scope of reference. Thirdly, if shown, whether such ‘new
P 253 difference’ was irrelevant to the actual issues for determination. Fourthly, if so,
P 254 whether the ‘new difference’ would have had a material impact on the final
outcome as announced in the award. And if it would, finally, whether that part of
the award inflicted by the ‘new difference’ may be separated from the other
parts of the award to warrant only the part affected to be set aside under
Section 37(3) … .
The same test was applied by the High Court, in Vedanta supra at paragraph 75.
[3] The Application of the Test
The test set out in The Government of India supra can be seen in its application in several
cases.
The High Court, in Sisma Enterprise Sdn Bhd v. Solstad Offshore Asia Pacific Ltd [2013] 1 LNS
335 at paragraphs 29-31, decided that the award was not in excess of the arbitral tribunal’s
discretion, as the issue that had been decided, that is the interpretation of a termination
clause, was squarely within the terms of reference to arbitration.
Similarly, the High Court, in Intraline Resources supra at paragraphs 53 and 60, held that
the fact that a particular clause of a contract was not pleaded did not mean that the
arbitral tribunal acted in excess of jurisdiction by construing the whole contract:
[53] The fact that the parties did not specifically plead this particular clause is
immaterial in the context of this instant case considering the nature of the
dispute, which would have required examination of the entirety of Contract at
any rate, as I have emphasized earlier. Secondly, and this is especially crucial,
in any event, the Arbitral Tribunal had in fact even convened a clarification
meeting attended by both parties on 7 August 2015 to seek the views of the
parties on the very issue, and as stated in the Final Award, ‘the impact of Article
7 – Changes to the Work in the Principal Document (Contract DU3542) in the
context of your respective positions as submitted in this arbitration and other
factual queries that may arise.’
…
[60] A party seeking to set aside an award under Section 37(1) bears the burden
of providing proof which the plaintiff on the evidence in the instant case fails to
establish. There is no ‘new difference’ let alone one which had a material
impact on the final outcome of the Final Award to justify this Court exercising its
discretion to set aside the Final Award. It cannot therefore be said that the Final
Award dealt with a dispute not contemplated within the terms of submission to
arbitration (Section 37(1)(a)(iv)) or that it contained decisions on matters
beyond the scope of submissions to arbitration (Section 37(1)(a)(v)).
The High Court, in Awan Timur Palm Oil Mills Resources (Johor) Sdn Bhd v. Inno-Wangsa Oils
& Fats Sdn Bhd [2018] MLJU 622 at paragraphs 76, 78, 79 and 81, held that an award should
be set aside for want of jurisdiction, as there was no contract between the parties. The
court also held that the dispute on the existence of the contract should have been
determined by the courts rather than the arbitral tribunal. Further, the High Court held
P 254 that there was no need for a party to comply with an appeal procedure provided by
P 255 arbitration rules before applying to set aside the award:
[76] The Respondent had argued that an appeal under Section 3 of the PORAM
Rules must first be exhausted as the alternative remedy before coming to the
High Court … .
…
[78] However, that argument does not gain the desired traction unless the
dispute between the parties had fallen squarely within the jurisdiction of the
arbitral tribunal in the first place, and that due process within their jurisdiction
was then to take its course.
[79] I find that the arbitrators had no business to take on jurisdiction to
adjudicate whether there was a contract in the first place. It was not a clear
enough case, and they certainly did not have to take it upon themselves to
adjudicate on the issue of formation of contract. The civil court would be better
equipped to handle such a dispute which would involve dealing with conflicting
evidence.

152
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 …
[81] In conclusion therefore, I find that the arbitrators had exceeded their
jurisdiction, whereby they had failed to show sufficient and cogent basis for
them to embark on the preliminary issue of whether there was a contract. It was
not something that had clearly fallen within their jurisdiction, as there was
nothing to indicate how the particular industry practices had come into play, or
which would even make them best suited to adjudicate on the particular facts
of this dispute.
[4] Waiver
Section 18(3) of the Arbitration Act 2005 provides that a plea that an arbitral tribunal does
not have jurisdiction must be raised in the defence at the latest. And, section 18(5)
provides that a plea of excess of jurisdiction must be raised as soon as such a matter
occurs during the arbitral proceedings. As stated in §18.02 supra, if such a plea is not taken
in time, a party would have waived its right to object later during an application to set
aside the award.
The Federal Court, in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s
Democratic Republic [2017] 6 AMR 219 at paragraph 215, decided that if this timeline is not
complied with but there is no objection by the other party than the other party may have
waived the non-compliance:
… Equally, if a party raises an out of time challenge but the other party does not
object to the lateness of the challenge, and the tribunal rules on the plea, the
other party cannot rely on the delay to prevent the High Court from deciding the
matter under art 16(3) [the equivalent of section 18(8) of AA 2005]’ (Williams &
Kawharu supra at 7.4.6). On the facts, even if the plea under section 18(3) or (5) of
AA 2005 were made out of time, the Appellants could not rely on delay, which
was not an issue during the arbitral proceedings, to prevent the High Court from
deciding the matter under Section 37 of AA 2005. On the facts, where there was
no objection to lateness, the Appellants could not raise the ‘out of time’
argument. As such, we reject the ‘out of time’ argument.
The judgment of the Court of Appeal, in Tridant Engineering supra, may also be seen in this
P 255 light. Although an issue was not specifically pleaded, the issue was in fact raised and does
P 256 not appear to have been objected to as being in excess of jurisdiction. Due to this failure
to object during the arbitral proceedings, the party was not entitled to subsequently object
during the application to set aside the award.
[5] Not Bound by the Arbitral Tribunal’s Award
The courts will not be bound by any findings of the arbitral tribunal on jurisdiction.
Instead, in an application to set aside, the courts will rehear the dispute on jurisdiction.
This was confirmed by the High Court, in Vedanta supra at paragraphs 77 and 78:
[77] However where jurisdictional challenge is concerned under section 37 of the
Arbitration Act 2005, the Courts have taken the approach that it is to be
assessed independently by the supervising court notwithstanding any decision
in relation thereto by an arbitral tribunal in the award.
[78] The supervising Court is not fettered by what the Arbitral Tribunal has
decided on the question of its jurisdiction with respect to its mandate or
competence or that it should defer to the decision of the Tribunal on this
question except that ‘… (depending on its cogency) that reasoning will inform
and be of interest to the court.’

[E] Composition and Procedure

An award may be set aside if the composition of the arbitral tribunal or the procedure of
the arbitration is not in accordance with:
(1) the arbitration agreement, which would include any rules of arbitration agreed to
therein;
(2) the Arbitration Act 2005, if the arbitration agreement is in conflict with a non-
derogable provision of the Act; or
(3) the Arbitration Act 2005, in the absence of provisions in the arbitration agreement
dealing with these matters.
The High Court, in Vedanta supra at paragraphs 90-93, recognized that challenges to the
composition of the arbitral tribunal are often likely to be waived, as most institutional
rules allow a party to make such a challenge, which, if not exercised, will result in a waiver.

§37.04 THE HIGH COURT FINDS THAT …

The first six grounds for setting aside an award have been considered under §37.03 supra.
The applicant is required to provide proof of these grounds under section 37(1)(a) of the
Arbitration Act 2005.

153
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 256 The next two grounds for setting aside an award are set out under section 37(1)(b) of the
P 257 Arbitration Act 2005. The courts appear to be entitled to act of their own motion under
section 37(1)(b), and the applicant accordingly does not appear to be expressly required to
provide proof.
The absence of a requirement for proof in section 37(1)(b) has been recognized by the High
Court. Despite the absence of such a requirement, the High Court has repeatedly
emphasized that an applicant must provide sufficient basis for the High Court to ‘find’ one
of the two grounds under section 37(1)(b). (5)
The Court of Appeal, in Sigur Ros supra at paragraph 25, confirmed that an applicant under
section 37(1)(b) must provide evidence and that the courts will not embark on an
independent exercise of their own to identify the grounds:
Second, it is only upon proof of the presence of any of the grounds relied on that
an award may be set aside. Although unlike section 37(1)(a), section 37(1)(b) does
not expressly state that the appellant must prove the matters complained of,
whether under section 37(1)(b)(i) or (ii), it makes sense that there must be
evidence presented in order for the Court to find if either of the two grounds
under section 37(1)(b), exists. The Court does not embark on any independent
exercise to find if the conditions or grounds under section 37(1)(b)(i) or (ii) are
met.
The two grounds under section 37(1)(b) of the Arbitration Act 2005 are considered below.

[A] Not Capable of Settlement by Arbitration

An award may be set aside if the High Court finds that the subject matter of the dispute is
not capable of settlement by arbitration under section 37(1)(b)(i).
Section 37(1)(b)(i) corresponds with section 4 of the Arbitration Act 2005. Section 4
essentially provides that all disputes may be resolved by arbitration unless it is contrary
to public policy. Section 4 has been considered under §4.01 and §4.02 supra. It is
submitted that public policy will be given a restricted meaning in this context allowing
most disputes to be determined by arbitration.

[B] Public Policy

An award may be set aside if the court finds that it is in conflict with the public policy of
Malaysia under section 37(1)(b)(ii). The general principles used to determine if there has
been a breach of public policy have evolved since the Arbitration Act 2005 came into force
and are now quite settled.
First, public policy will be narrowly construed. This is in accordance with the minimal
interference envisaged by section 8 of the Arbitration Act 2005 and accepted by the courts.
This is also in accordance with the principle of party autonomy. As public policy is narrowly
construed, the courts will not generally allow any new head of public policy. In this context,
P 257 it has also been suggested in The Government of India supra at paragraph 152 that public
P 258 policy must be within the genre envisaged by section 37(2) of the Arbitration Act 2005.
Second, the applicant must specify the public policy that it relies on and prove that the
specified public policy has been breached. Initially, the courts required the applicant to
prove that the breach had resulted in prejudice. However, the Court of Appeal, in Sigur Ros
supra at paragraphs 48, 49, 63 and 64, has confirmed that there is no requirement to prove
prejudice, as this is not provided for in sections 37(1)(b)(ii) and 37(2). However, prejudice
may be considered by the courts as a factor in exercising their discretion whether to set
aside the award.
These principles can be gathered from a series of judgments by the High Court culminating
in a judgment of the Court of Appeal, which confirmed these judgments of the High Court.
First, the High Court, in The Government of India supra at paragraphs 142 to 143 and 152 to
153, inter alia, held:
[142] Although there appears to be no requirement of ‘proof in this subpara, and
whilst the question of what amounts to ‘public policy’ may be a difficult one, I
would also venture to say that the court nevertheless requires sufficient basis
for such allegation or ground in order that it may ‘find’ that ‘the award is in
conflict with the public policy of Malaysia’. This requirement extends to not only
identifying the particular public policy of Malaysia which is said to be
conflicted but also to providing basis of the alleged conflict; that is how it is
conflicted or breached; and how the breach has prejudiced the rights of the
plaintiff.
[143] This makes the threshold high in that by its very nature, it should be
immediately obvious or at least fairly rapidly apparent that there has been
such a breach or conflict with the public policy of Malaysia court. From the
reasons offered, the court must be compelled to agree or that a strong case has
been made out that the award conflicts with the public policy of Malaysia.
Otherwise, the contractual arrangements of the parties must be maintained … …
.

154
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [152] It is clear that while sub-s 37(2) serves to provide some examples of what
may be considered as conflicting with the public policy of Malaysia; and it
would be those awards which were induced or affected by fraud or corruption;
or where there is a breach of natural justice, as is the case with proper statutory
interpretation, any other complaint of conflict with public policy must fall
within this genre as set out in paras 37(2)(a) and(b). Quite undisputedly, these
two areas may be said to fall within the basic and fundamental notions or
principles of justice.
[153] In addition, while sub-para 37(2) may contain the rider of ‘Without limiting
the generality of sub-para (1)(b)(ii)’, a restrictive and narrow approach must be
taken; and the court’s curial intervention, minimum. I am fortified in my view
when this provision is read together with s 8 of Act 646.
The High Court expanded on these principles in MMC Engineering supra at paragraphs 146-
149 and 151-154.
The High Court then, in Tan Kong Han v. QDB Ventures Sdn Bhd [2016] 1 LNS 870 at
paragraph 29, summarized these principles as a set of guidelines:
Therefore, the guidelines or principles that may be drawn are as follow:
(i) the public policy ground must be given a narrow and more restrictive
construction and interpretation;
P 258
P 259
(ii) the Court should be slow to find for such a ground or to expand the
hitherto accepted and recognized genre of categories of public policy;
(iii) the concept of public policy cannot be vague or generalized but must be
identified with clarity and particulars;
(iv) allegations must be sufficiently serious to offend or violate most basic
notions and principles of morality and justice, or where upholding the
award would shock the conscience or is clearly injurious to public good or
wholly offend the ordinary reasonable and fully informed member of the
public;
(v) Strong, compelling evidence must be established;
(vi) causative link between the alleged fraud or corrupt conduct and the
award rendered must be shown;
(vii) prejudice must be proved.
And, the High Court, in Intraline Resources supra at paragraph 26(n), held:
In respect of Section 37(1)(b)(ii) and Section 37(2)(b) (i) and (ii) on breaches of
natural justice on grounds of conflict with public policy, the concept of ‘public
policy’ is to be construed narrowly, such as only applicable when it is clearly
injurious to the public good or where it violates the most basic notion of
morality and justice … .
The Court of Appeal, in Sigur Ros supra, confirmed the principles developed by the High
Court, in particular in The Government of India supra and MMC Engineering supra, save that
there was no requirement for the applicant to prove prejudice, which was only a factor to
be considered in the exercise of the courts’ discretion. The Court of Appeal also confirmed
that where there has been a breach of public policy, the whole award and not part only
must be set aside. The Court of Appeal, in Sigur Ros supra at paragraphs 27, 30-34, 48 and
49, held:
[27] The examples or illustrations in section 37(2) to explain what circumstances
or conditions may be considered as conflicting with the public policy of
Malaysia, are by no means exhaustive. This is made plain by its opening terms:
‘Without limiting the generality of subparagraph (1)(b)(ii)’. Any other
circumstance or complaint of the presence of a conflict with public policy
however, must fall within the genre set out in sections 37 (2)(a) and (b). In other
words, the sui generis rule should apply. The Court should however, be slow in
acceding to any suggestion to expand the recognized and established
categories of conflict with public policy.
…
[30] In the first place, the concept of public policy is itself a ‘broad’ concept … .
[31] Next, having regard to the context of the dispute, that it arises out of
commercial and contractual transactions where parties may be said to have
received advice including legal advice, the conflict with public policy ground
that is envisaged in section 37(1)(b)(ii) ought to be read narrowly and more
restrictively. The Court’s curial intervention should be sparingly used; and this
would be in keeping with the terms in section 8 of Act 646.
[32] This then makes the threshold to be met somewhat high in that by its very

155
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 nature, ‘it should be immediately obvious or at least fairly rapidly apparent
P 259
that there has been such a breach or conflict with the public policy of Malaysia
P 260 … The Court must be compelled to agree or that a strong case has been made
out that the award conflicts with the public policy of Malaysia. Otherwise, the
contractual arrangements of the parties must be maintained.’
[33] Further, ‘it must be understood that the notion or concept of public policy
in arbitration is not one grounded in public law, generally understood as the
Wednesbury principles. In other words, the award will not be set aside simply
because it is irrational or unreasonable or one that is so irrational or
unreasonable that no reasonable person could have made such an award. The
concept of public policy must be one taken in the ‘higher sense, where some
fundamental principle of law and justice is engaged, some element of illegality,
where enforcement of the award involves clear injury to public good or the
‘integrity of the Court’s process and powers will thereby be abused’.
[34] Fourth, where such a breach within the terms of section 37(1)(b)(ii) read with
section 37(2)(b) has been established, it is the whole award that will be set
aside. The terms of section 37 do not appear to allow for the operation of the
principle of severance, especially in view of the terms of section 37(3) read with
section 37(1)(a)(v). Subsection 37(3) provides that where the decision on matters
submitted to arbitration can be separated from those not so submitted, only
that part of the award which contains decisions on matters not submitted to
arbitration may be set aside. The words ‘matters submitted to arbitration can
be separated from those not so submitted’ are peculiar to the terms appearing
in section 37(1)(a)(v), the only provision which makes specific reference to
section 37(3), that it is read ‘subject to subsection (3) …’.
…
[48] … his lordship rightly embarked on an examination of the duties of the
arbitrator, establishing that there were these two duties which we see are core
duties, and how those duties may be breached, his lordship erred when he went
further to require that there must be proof of actual or real prejudice suffered
by the appellant before discretion is exercised in its favour even where breach
has been established. His lordship did so despite recognizing that the position
under our sections 37(1) (b) (ii) and 37(2) is different from that under those two
jurisdictions … .
[49] We say, with respect, that his lordship has erred as that additional
requirement is not found under section 37 of Act 646. It may be the specific
requirements of the arbitration laws of Singapore or even the UK, but it is not
required under section 37. To require such compliance or terms would, in our
view, run contrary to the terms of section 8 of the Act. The powers of the Court to
intervene in arbitration matters are as prescribed by the Act. We should refrain
from importing into our arbitration or litigation regime an understanding or
principle which is not provided for under our very own statute. Were the
requirement for actual or real prejudice a requirement to be met under section
37(1)(b)(ii) read with section 37(2) (b), it would be for the legislation to say so,
and not the Court.
Before going into the two examples of a breach of public policy provided for in section
37(2) of the Arbitration Act 2005, we will consider situations where the courts have held that
there is no breach of public policy.
P 260 There are two such situations. First, the courts have emphasized that any alleged
P 261 misinterpretation of a contract by the arbitral tribunal cannot amount to a breach of
public policy. (6) Second, the courts have decided that a delay in the delivery of an award
by the arbitral tribunal would not amount to a breach of public policy. (7)
We will now consider the two examples of a breach of public policy provided for under
section 37(2)(b) of the Arbitration Act 2005.
[1] Fraud or Corruption
Fraud or corruption is an example of a breach of public policy that would render the award
liable to be set aside. As fraud or corruption under section 37(2)(a) come within a breach of
public policy under section 37(1)(b)(ii), the applicant is not expressly required to provide
proof. Nevertheless, the applicant is required to provide a sufficient basis to enable the
court to ‘find’ the alleged fraud or corruption. In this regard, the applicant is required to
provide:
(1) strong and compelling evidence of the fraud or corruption;
(2) evidence of a causal link between the fraud or corruption and the award; and
(3) evidence that the applicant’s rights were thereby prejudiced.
It appears that the words ‘fraud’ and ‘corruption’ will be given their literal meaning by the
courts in applying the three-stage test above. These principles are expressed in
considerable detail in the judgment of the High Court, in MMC Engineering supra at
paragraphs 161 and 162, where it was, inter alia, held:

156
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [161] However, it is clear from the terms of subparagraph (2)(a) that the matters
complained of, that is, fraud or corruption, must have induced or affected the
making of the award. This indicates the requirement of a causal link between
the matters complained of and the award which is sought to be set aside or
remitted. I would take the same approach in cases where the allegations are
premised on subparagraph (2)(b). Similarly, the procedural injustice must have
affected the proceedings or the making of the Award. Otherwise, the application
must be dismissed.
[162] And, in this regard, I agree with the Defendant that the Plaintiffs have
failed to meet all the requirements set. All that has been shown at this stage
and at the most, is that Mr Holmes is a person of possibly bad character who is
possibly unfit to sit as an arbitrator. On its own, that it grossly insufficient. In
fact, I would say all the matters taken together would still be insufficient. As
suggested by the Defendant, the focus of the Model Law and the terms of
subparagraph 37(1)(b)(ii) and paragraph 37(2) is on the fairness and justice of the
arbitration process; not on the character of personalities, including the
arbitrators, involved in that process. Unless the Plaintiffs can show how the
character ground can and has affected the rights of fairness and justice in an
arbitration proceeding, it cannot possibly be the subject of a public policy
category.
P 261
P 262
[2] Natural Justice
A breach of the rules of natural justice, either in the arbitral proceedings or in the making
of an award, is another example of a breach of public policy.
The rules of natural justice comprise two fundamental principles, which are the rule
against bias and the right to be heard. These two principles are provided for in sections 14
and 20 of the Arbitration Act 2005, respectively, and are considered under §14.03 and
§20.03 supra.
The applicant must identify the rule of natural justice and prove that it has been breached.
However, the applicant does not need to prove that such breach caused prejudice,
although such prejudice may be considered by the courts, as a factor in the exercise of the
court’s discretion to set aside the award. The courts initially required the applicant to
prove prejudice, but this is no longer required, as the courts have recognized that sections
37(1)(b)(ii) and 37(2)(b) do not expressly include such a requirement.
The breach of the rules of natural justice may occur in the making of the award or during
the arbitral proceedings, as expressly provided for in section 37(2)(b), and is not limited to
the making of the award. This is again contrary to the initial position taken by the courts
that limited such breach to the making of the award.
Once the rules of natural justice are shown to have been breached, the courts have little
discretion but to set aside an award unless the breach was immaterial.
These principles can be seen developing in a series of judgments, starting with the
judgment of the High Court in Taman Bandar supra, emphasized the need for the applicant
to specify the particular rule of natural justice that had been breached by reference to a
particular statute. The High Court also emphasized the need for an applicant to prove the
prejudice suffered as a result of a breach of the specified rule of natural justice.
In this context, the High Court, in Taman Bandar supra at paragraph 23(6), inter alia, held:
In addition the complaint of the plaintiff plainly falls within the scope and
jurisdiction of the arbitrator. The AA 2005 does not permit the court to intervene
in matters which does not strictly fall within any of sub-section of s. 37. In
consequence general allegations are not sufficient as it is mandatory
requirement for the need of proof. For example, in this case the plaintiff alleges
breach of rules of natural justice without setting out the prejudice suffered and
proof thereof. Further, almost all rules of natural justice are now incorporated in
the Federal Constitution, relevant Acts, as well as rules of court etc. Thus, the
complaint now must in almost all cases relate to one of the breaches of the
Constitution, or any Act of Parliament, rules of court etc …
The High Court, in Intraline Resources supra, expanded on Taman Bandar supra and held
that four requirements must be met if an award was to be set aside on the grounds of
natural justice:
(1) identify the rule of natural justice;
(2) show how such rule has been violated;
P 262
P 263
(3) demonstrate how such violation was connected to the award; and
(4) show how such violation prejudiced the applicant.
The High Court, in Intraline Resources supra, also held that an arbitral tribunal was not

157
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 bound to accept either party’s position and was entitled to form their own view provided
that such view could have been foreseen by a reasonably diligent party. The High Court, in
Intraline Resources supra at paragraphs 26(o), (p) and 88, held:
[26] …
(o) To succeed on this ground of breach of natural justice, the plaintiff must
show unfairness in the limited circumstances that a reasonable litigant could
not have foreseen the possibility of reasoning of the type contained in the
award … .
(p) The four elements to be established by an applicant seeking to set aside an
award on account of a breach of natural justice to the satisfaction of the Court
are first, to identify the rule alleged to have been violated, secondly, to show in
what fashion it had been violated, thirdly, to demonstrate how the violation was
connected to the making of the arbitral award, and fourthly to show in what
manner the violation prejudiced the rights of the applicant … .
…
[88] The plaintiff cannot therefore legitimately expect the Arbitral Tribunal to
religiously follow the stance or any specific arguments presented by one party
or the other because it is undoubtedly entitled to reformulate and refashion the
way in which different arguments and concepts have been consolidated, make
its own value judgements between the range of the spectrum that encompasses
the multifarious contentions made available before it and exercise reasonable
latitude in arriving at its own conclusions in the final award.
The Court of Appeal, in Asean Bintulu Fertilizer Sdn Bhd v. Wekajaya Sdn Bhd and another
appeal [2017] MLJU 1530 at paragraphs 17 and 18, held that an arbitral award that was
delivered four years late would not be set aside on the grounds of natural justice:
[17] In the instant case, the learned judge had taken into consideration the
delay point and had censored the learned arbitrator. To save the award from
being setting aside, the learned trial judge had taken a curial scrutiny of the
complaint in relation to section 37 as well as section 42 to sustain the award,
thereby demonstrating that the appellant did not suffer any material prejudice.
The learned judge had also provided some relief by amending the interest
provision. The complaint of pre-award interest on the face of record may look
unjust but it being loss for use of money for the respondent at the market rate
cannot be unjust or abhorrent to the notions of justice to seek court intervention
in a party autonomy concept and also in the light of section 36 of AA 2005. The
withholding of that money by the appellant, though no fault of its own in
commercial sense, may have been advantageous to the appellant and a loss to
the respondent … .
[18] In our view, the delay issue cannot be the sole reason for appellate
intervention when in the instant case the learned arbitrator had delivered a
speaking award within the contemplation of the law.

P 263 The Court of Appeal, in Sigur Ros supra at paragraphs 48, 49 and 63, reversed the earlier
P 264 requirement that an applicant must prove prejudice arising from a breach of the rules of
natural justice. Prejudice would, however, remain a factor to be considered by the courts in
exercising their discretion whether to set aside the award.
The Court of Appeal, in Sigur Ros supra at paragraph 55, also held that a breach of the rules
of natural justice might occur during the making of the award or during the arbitral
proceedings.
Further, the Court of Appeal, in Sigur Ros supra at paragraphs 71-73 and 90, emphasized
that where an arbitral tribunal relied on extraneous evidence, the arbitral tribunal must
give the parties an opportunity to be heard and provide rebuttal evidence, failing which
there will be a breach of the rules of natural justice. This was also confirmed by the Court of
Appeal, in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd and another appeal [2018] MLJU
968 at paragraphs 32, 33, 36 and 38.

§37.05 TIME LIMIT

Section 37(4) of the Arbitration Act 2005 provides that an application to set aside should
be made within ninety days from:
(1) the receipt of the award; or
(2) the disposal of an application for correction, interpretation or an additional award
under section 35.
Section 37(5) provides two exceptions to the general ninety-day rule. Where there is fraud
or corruption, there does not appear to be any time limit for an application to set aside an
award.
There is some controversy as to whether the time limit under section 37(4) is mandatory, in

158
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the sense that time cannot be extended by the courts, or discretionary in that time may be
extended by the courts. This controversy has been considered under §8.03[F] supra.
Despite the subsequent judgments of the High Court, in JHW Reels Sdn Bhd v. Syarikat
Borcos Shipping Sdn Bhd [2013] 7 CLJ 249 and Kembang Semantan Sdn Bhd v. JEKS
Engineering Sdn Bhd [2016] 2 CLJ 427, the judgment of the Court of Appeal, in Government of
the Lao People’s Democratic Republic v. Thai-Lao Liquite Co Ltd & Anor [2011] 1 LNS 1903,
remains binding.
The position therefore is that the time limit in section 37(4) is directory and the courts
retain their discretion to extend time. The factors that will be considered are:
(1) the length of the delay;
(2) the reason for the delay;
(3) the prospect of success; and
(4) the degree of prejudice to the respondent if the extension is granted.
P 264
P 265

§37.06 REMISSION
Section 37(6) of the Arbitration Act 2005 provides that:
(1) a party may request an adjournment where an application is made to set aside an
award;
(2) the High Court may then allow such an adjournment for a period of time it
determines; and
(3) the arbitral tribunal may, during this adjournment, resume the arbitral proceedings
or take such steps as will eliminate the grounds for setting aside.
Although the word ‘remission’ is not used in section 37(6), it essentially preserves the
remission procedure, which is familiar to parties to arbitration in common law
jurisdictions. This remission procedure is now placed within the framework of setting aside
proceedings. In the event the remission before the arbitral tribunal proves futile, the High
Court will resume the setting aside proceedings. (8)
Section 37(6) of the Arbitration Act 2005 reflects Article 34(4) of the 1985 Model Law. The
remission procedure was found to be useful, as it would allow the arbitral tribunal to
rectify a defect, which might otherwise lead to the setting aside of the award. Furthermore,
the general nature of this provision allowed both the courts and the arbitral tribunal the
flexibility to deal with a particular case. (9)
The Court of Appeal, in Garden Bay Sdn Bhd v. Sime Darby Property Sdn Bhd [2018] 2 MLJ 636
at paragraphs 23 and 24, emphasized the significance of section 37(6), which allows an
arbitral tribunal to rectify a defect. The Court of Appeal suggested that it may be an abuse
of process for a party to apply to set aside an award without first allowing an arbitral
tribunal to correct a defect relating to natural justice. However, the Court of Appeal
recognized that a party need not allow the arbitral tribunal to correct a defect where it
involved public policy or incapacity of a party:
[23] Section 37(6) of the AA 2005 is pari materia to article 34(4) of the UNCITRAL
Model Law 1986. The Model Law regime does provide a procedure to save the
award for breach of natural justice or allegation of related to issues such as ‘not
within the contemplation of parties’ or issues related to pre or post award
interest, etc. That is to say, s 37(6) does not give an option to set aside the award
as of right at the trial stage or even at the apex stage. The courts must be
vigilant of the jurisprudence related to s 37(6) and should not set aside the
award in the first instance and create miscarriage of justice.
[24] Cases in this area of law have not highlighted in detail the significance of s
37(6); a saving provision for all injustice and/or maladies complained of in
relation to an award. In fact with the presence of s 37(6) regime, it will be an
abuse of process of court for any applicant having submitted to an arbitration
agreement and in the face of s 36 of the AA 2005, to move the court to set aside
the arbitration award. In saying so, there may be instances where s 37(6) may
not be applicable. For example, where the grounds relate to incapacity of
parties, etc or public policy.
P 265
P 266
Subsequently, the Court of Appeal, in Sigur Ros supra at paragraph 38, emphasized that
proceedings may only be adjourned under section 37(6) on the application of a party and
not at the courts own motion:
… But, the option of sending the award back to the arbitrator to resume
arbitration proceedings does not arise in this appeal as no application or
request under section 37(6) was made to the High Court at the material time.
Neither party applied for the proceedings before the High Court to be
adjourned pending a reference back to the arbitrator for resumption of hearing

159
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 of the arbitration. We are of the view that the option under section 37(6) is at
either party’s behest and not on the Court’s own invocation.

§37.07 SECURITY
Section 37(7) of the Arbitration Act 2005 allows the High Court to order, where an
application is made to set aside an award, that the applicant pay the awarded amount to
the High Court or otherwise secure the amount.
The High Court has a discretion whether to order such security. The primary consideration
of the High Court in exercising this discretion is whether the applicant will suffer prejudice.
However, the mere fact that the applicant has been wound up or is otherwise unable to
pay the security will not prevent such security being in order.
These principles were confirmed by the High Court, in Mechanalysis Sdn Bhd (In Liquidation)
v. Appraisal Property Management Sdn Bhd [2016] 8 CLJ 81 at paragraph 59, where it was,
inter alia, held:
Pursuant to s. 42(8)(b) of the AA, the court clearly has the requisite discretion to
determine and make an order that the award sum adjudged by the arbitral
tribunal to be payable to the winning party be brought into court or otherwise
secured, provided that the exercise of such discretion as empowered under the
said statutory provision does not in any non-inconsequential fashion,
detrimentally affect or prejudice the losing party who is now seeking to set
aside the arbitration award. The raison d’etre of the provision is to clothe the
court with the ability to exercise such powers in appropriate and deserving
cases in order to ensure that the losing party who seeks to set aside the arbitral
award continue to be able to meet such awards in the event its application is
unsuccessful, and that the application is legitimate, and not otherwise
frivolously instituted to delay and avoid making payment. In the instant case, it
would be appropriate and fair that some security be provided to the defendant
in connection which the arbitral award made in its favour and that in any event,
as observed earlier, there is a patent lack of evidence as to the exact state of
the plaintiff’s financial health (apart from the fact of having been wound up)
and the resources at its disposal to provide the security.
P 266

References
1) See Uba Urus Bina Asia Sdn Bhd v. Quirk & Associates Sdn Bhd & Anor [2016] 4 CLJ 468 at
para. 37, HC.
2) See Intraline Resources supra at paras 26(h) and (k), HC.
3) See Tan Sri Dato’ Seri Visu Sinnadurai, Contracts Act, A Commentary (LexisNexis 2015) at
paras 10.01 to 12.03 for a detailed commentary on these four aspects of incapacity.
4) See generally Lord Collins, Dicey, Morris and Collins on The Conflict of Laws (15th edn,
Sweet & Maxwell 2017) at paras 32R-168 – 32-178.
5) See The Government of India supra at para. 142, HC; followed in Kilang Sawit Bell Sdn Bhd
v. Kwantas Oil Sdn Bhd [2015] MLJU 1985 at para. 25, HC; and MMC Engineering Group Bhd
& Anor v. Wayss & Freytag (M) Sdn Bhd & Anor [2015] MLJU 477 at para. 159, HC.
6) See The Government of India supra at paras 19-20, HC; Kilang Sawit supra at para. 32, HC.
7) See Asean Bintulu Fertilizer Sdn Bhd v. Wekajaya Sdn Bhd and another appeal [2017] MLJU
1530 at para. 18, CA.
8) See Analytical Commentary, Article 34, commentary 14.
9) See Analytical Commentary, Article 34, commentary 13; UNCITRAL Report para. 30.6.

160
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 8: Recognition and Enforcement of Awards
Publication 38. Recognition and Enforcement
Arbitration in Malaysia: A (1) On an application in writing to the High Court, an award made in respect of an
Commentary on the arbitration where the seat of arbitration is in Malaysia or an award from a foreign State
Malaysian Arbitration Act shall, subject to this section and section 39 be recognized as binding and be enforced by
entry as a judgment in terms of the award or by action.
(2) In an application under subsection (1) the applicant shall produce –
Jurisdiction
(a) the duly authenticated original award or a duly certified copy of the award; and
Malaysia
(b) the original arbitration agreement or a duly certified copy of the agreement.
(3) Where the award or arbitration agreement is in a language other than the national
Bibliographic reference language or the English language, the applicant shall supply a duly certified translation
of the award or agreement in the English language.
'Chapter 8: Recognition and (4) For the purposes of this Act, ‘foreign State’ means a State which is a party to the
Enforcement of Awards', in Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by
Thayananthan Baskaran , the United Nations Conference on International Commercial Arbitration in 1958.
Arbitration in Malaysia: A
Commentary on the §38.01 INTRODUCTION
Malaysian Arbitration Act,
(© Kluwer Law International; Section 38 of the Arbitration Act 2005 provides for the recognition and enforcement of
Kluwer Law International arbitral awards, as well as the formal requirements that need to be satisfied for such
2019) pp. 267 - 300 recognition and enforcement.
P 267
P 268
Section 38 of the Arbitration Act 2005 is based on Article 35 of the 1985 Model Law.
Although section 38 is based on the 1985 Model Law, there are significant differences, in
particular:
(1) unlike Article 35, section 38 does not apply to arbitral awards ‘irrespective of the
country in which it was made’. Instead, section 38 is limited to States which are party
to the New York Convention;
(2) unlike Article 35, section 38 does not draw a distinction between recognition and
enforcement. Instead, an application to the High Court is required for both and
recognition is accordingly not automatic; and
(3) the languages referred to as the ‘official language of this State’ in Article 35 is
specified as the national language, which is Malay, or English in section 38.
These differences, the first two of which are of considerable significance, are considered in
§38.02 and §38.04 infra.
Article 35 of the 1985 Model Law was amended in 2006. Essentially, the amendments in
2006 saw the removal of the need to produce the arbitration agreement or a duly certified
copy of the award, with an uncertified copy of the award being sufficient. The amendments
were to reflect the amendments made in 2006 to Article 7, which no longer requires an
arbitration agreement in writing.
Article 35 of the 1985 Model Law is in turn based on Articles III and IV of the New York
Convention, which provide:
Article III
Each Contracting State shall recognize arbitral awards as binding and enforce
them in accordance with the rules of procedure of the territory where the award
is relied upon, under the conditions laid down in the following articles. There
shall not be imposed substantially more onerous conditions or higher fees or
charges on the recognition or enforcement of arbitral awards to which this
Convention applies than are imposed on the recognition or enforcement of
domestic arbitral awards.
Article IV
1. To obtain the recognition and enforcement mentioned in the preceding
article, the party applying for recognition and enforcement shall, at the
time of the application, supply:
(a) The duly authenticated original award or a duly certified copy
thereof;
(b) The original agreement referred to in article II or a duly certified
copy thereof.
2. If the said award or agreement is not made in an official language of the
country in which the award is relied upon, the party applying for
recognition and enforcement of the award shall produce a translation of

161
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 these documents into such language. The translation shall be certified by
an official or sworn translator or by a diplomatic or consular agent.
Article 35 of the 1985 Model Law largely resembles Articles III and IV of the New York
Convention. This is intentional, as the 1985 Model Law is intended to work in harmony with
the New York Convention. (1)
P 268
P 269
The only significant difference between Article 35 of the 1985 Model Law and Articles III and
IV of the New York Convention is the omission of the formal requirements for translation at
the end of Article IV of the New York Convention in the 1985 Model Law. This omission was
due to the many differences in national practice on the requirements for translation. (2)
The Federal Court, in CTI Group Inc v. International Bulk Carriers SpA [2017] 5 MLJ 314 at
paragraphs 56 and 57, recognized the origins of section 38 in the 1985 Model Law and 1958
New York Convention:
[56] The provisions on recognition and enforcement of arbitral awards as
contained in articles 35 and 36 of the UNCITRAL Model Law on International
Commercial Arbitration (‘the Model Law’) have been incorporated into ss 38 and
39 of our Arbitration Act.
[57] Articles 35 and 36 of the Model Law are derived from articles IV and V of the
New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards 1958 (‘the Convention’).

§38.02 THE NEED FOR AN APPLICATION

Section 38 of the Arbitration Act 2005 requires an application to be made for both the
recognition and enforcement of an arbitral award. This marks a significant departure from
Article 35(1) of the 1985 Model Law, which only requires an application for enforcement.
Under the 1985 Model Law, an award is recognized as binding automatically without the
need for any application. (3)
The reason for this departure in the Arbitration Act 2005 is unclear. It also appears to be at
odds with section 36 of the Arbitration Act 2005 that provides that an award is final and
binding. Perhaps, sections 36 and 38 can be read together to mean that while an award is
final and binding, formal recognition of this requires an application to be made.

§38.03 HIGH COURT

The application for recognition and enforcement must be made to the High Court and not
the subordinate courts in accordance with section 38(1) of the Arbitration Act 2005. (4)
P 269
P 270

§38.04 RECIPROCITY
Another significant departure from Article 35(1) of the 1985 Model Law is the requirement
for reciprocity in section 38 of the Arbitration Act 2005. In order for an award from a foreign
state to be recognized as binding and enforced, sections 38(1) and (4) require the foreign
state to be a party to the New York Convention. This is the reciprocity requirement. (5)
This requirement for reciprocity marks a significant departure from Article 35(1) of the 1985
Model Law which by the use of the words ‘irrespective of the country in which it was made’
emphasizes that all arbitral awards are to be treated uniformly regardless of where they
are made. (6)
Section 38(1) was amended by the Arbitration (Amendment) Act 2011. The words ‘a
domestic arbitration’ were substituted with ‘an arbitration where the seat of arbitration is
in Malaysia’. The amendment made to section 38(1) was to address a lacuna in the section
that prima facie allowed only for the enforcement of an award made in a ‘domestic
arbitration or an award from a foreign state’ but not an international arbitration with a
seat in Malaysia. It is now clear that an award made in an international arbitration with a
seat in Malaysia is enforceable under section 38, which was no doubt the intention of the
legislature but had previously been overlooked.
The Court of Appeal, in Alami Vegetable Oil Products Sdn Bhd v. Hafeez Iqbal Oil & Ghee
Industries (Pvt) Ltd [2016] 7 CLJ 19 at paragraph 11, recognized that an award made in an
international arbitration with a seat in Malaysia may be enforced under section 38 after
the amendments in 2011 and confirmed that this was also the position prior to the
amendments based on a purposive interpretation of the Arbitration Act 2005:
A reading of the AA 2005 before 2011 amendments will show that Parliament had
at least three types of award in mind which can be recognised and enforced in
Malaysia. They are as follows:
(a) domestic award;
(b) domestic international award as this is borne out in s. 3 itself though the

162
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 word ‘domestic international’ is not used but it says ‘international
arbitration where the seat of arbitration is in Malaysia’. That will mean
and relate to the facts of the appellant’s case where the respondent is a
Pakistani company. If it is a domestic international award s. 3(3)(a) will
apply to say that Parts I, II and IV will apply. Sections 38 and 39 come
within Part II of the AA 2005. That is to say, notwithstanding a flawed
P 270
definition of domestic award by the draftsman in s. 2, s. 3 makes it clear
P 271 that a domestic international arbitration award is capable of recognition
and enforcement under ss. 38 and 39 of the Act. This flawed definition
was subsequently corrected by the 2011 amendment to s. 38 of the AA
2005.
The High Court, in Twin Advance (M) Sdn Bhd v. Polar Electro Europe BV [2013] 7 MLJ 811 at
paragraph 23, confirmed that section 38 applied to an arbitration with a seat outside
Malaysia, as an exception to section 3 of the Arbitration Act 2005.

§38.05 ENFORCED AS A JUDGMENT

Section 38(1) of the Arbitration Act 2005 provides that an award shall be enforced by entry
as a judgment.
Therefore, once the award has been entered as a judgment, it may be executed like any
other judgment of the courts in Malaysia, by way of garnishee proceedings, judgment
debtor summons, writ of seizure and sale, winding-up or bankruptcy.
In terms of limitation, sections 6(1)(c) and 6(3) of the Limitation Act 1953 provide:
6. Limitation of actions of contract and tort and certain other actions
(1) Save as hereinafter provided the following actions shall not be brought after
the expiration of six years from the date on which the cause of action accrued,
that is to say –
…
(c) actions to enforce an award;
…
(3) An action upon any judgment shall not be brought after the expiration of
twelve years from the date on which the judgment became enforceable and no
arrears of interest in respect of any judgment debt shall be recovered after the
expiration of six years from the date on which the interest became due.
The Federal Court, in Christopher Martin Boyd v. Deb Brata Das Gupta [2014] 9 CLJ 887 at
paragraphs 24 and 25, confirmed that an application to enforce an award must be made
within six years of the award being received and the judgment entered in terms of the
award may then be executed within twelve years:
[24] It is clear to us that when parties sought to enforce an arbitration award ie,
to register it under s. 27 of the Arbitration Act 1952 or s. 38(1) of the Arbitration
Act 2005 the limitation period of six years pursuant to s. 6(1)(c) of the Limitation
Act 1953 applies … .
[25] It is also clear to us that the limitation period for enforcement, ie, the
execution of the judgment of the court, will then be 12 years as clearly
prescribed under s. 6(3) of the Limitation Act 1953 … Having said that and in
applying the 12 years limitation period under s. 6(3) of the Limitation Act 1953
we find that the High Court was therefore correct in finding that the appellant’s
bankruptcy proceedings were not barred by limitation since it had commenced
the action within 12 years from the date of the registration of the award as the
judgment of the court.
P 271
P 272

§38.06 CONDITIONS AND PROCEDURE

Sections 38(2) and (3) of the Arbitration Act 2005 set out the conditions for recognition and
enforcement of an award. There are two conditions. The applicant must produce the
arbitration agreement and the award or a duly certified copy of these documents with a
translation in English, if these documents are not in English or Malay.
Sections 38(2) and (3) only lay down these two conditions and do not provide for the
procedure to be followed in making the application. (7)

[A] Procedure
The procedure is set out in Order 69 Rule 8 of the Rules of Court 2012, which provides:
8. Enforcement of awards (O. 69 r. 8)

163
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (1) An application for permission to enforce an award in the same manner as
a judgment or an order may be made without notice in an arbitration
claim originating summons.
(2) The arbitration claim originating summons shall –
(a) state the name and the usual or last known place of abode or
business of the applicant, and the respondent against whom it is
sought to enforce the award, respectively; and
(b) state either that the award has not been complied with or the extent
to which it has not been complied with at the date of the
application.
(3) The applicant shall file by affidavit, written evidence on which he intends
to rely when he files his originating summons, including exhibiting the
original arbitration agreement and the duly authenticated original award
or, in either case, a duly certified copy thereof and where the award or
agreement is in a language other than the national language or English, a
translation of it in the English language, duly certified as a correct
translation by a sworn translator or by an official or by a diplomatic or
consular agent of the country in which the award was made.
(4) The Court may specify parties to the arbitration on whom the arbitration
claim originating summons shall be served.
(5) With the permission of the Court, the arbitration claim originating
summons may be served out of the jurisdiction irrespective of where the
award is, or is treated as, made.
(6) An order giving permission to enforce the award shall –
(a) be drawn up by the applicant; and
(b) be served on the respondent by –
(i) delivering a copy to him personally; or
(ii) sending a copy to him at his usual or last known place of
residence or business.
(7) Within fourteen days after service of the order giving permission to
enforce the award or, if the order is to be served out of the jurisdiction,
within such other period as the Court may set –
(a) the respondent may apply to set aside such order; and
(b) the award shall not be enforced until –
(i) after the expiration of that period; or
P 272
P 273
(ii) if the respondent applies within that period to set aside, until
after the application made by the respondent has been finally
disposed of.
(8) The order giving permission for enforcement shall contain a statement of
the right to make an application to set aside the order.
(8A) Order 11, rules 5, 6, and 8 shall apply to the service out of jurisdiction of
the arbitration claim originating summons, or any order made in such
claim, under paragraph (5).
(9) Where a body corporate is a party, any reference in this rule to a place of
residence or business shall have effect as if the reference were to the
registered or principal address of the body corporate.
(10) Where the award sought to be enforced is in the nature of an interim
injunction under subsection 13(6) of the 1952 Act or subsection 19(1) of the
2005 Act, the order shall be granted only if the applicant undertakes to
abide by any order the Court or the arbitral tribunal may make as to
damages. The order shall be enforceable immediately, and subparagraph
(7)(b) shall not apply.
The Rules of Court 2012 allow for the application for recognition and enforcement to be
made ex parte. Subsequently, the respondent may apply to set aside the ex parte order
within fourteen days.
Generally, as there are specific conditions and procedure, an applicant should comply
with this and should not attempt to seek an alternative avenue for relief. In this context,
the High Court, in David Liew Kong Ming (practicing as D Liew Architect) v. Government of the
State of Sabah [2010] MLJU 1719 at paragraphs 7 and 10, inter alia, held:
[7] … The Arbitration Act has provided a specific procedure and remedy to the
Plaintiff to register and enforce the award. However, the Plaintiff in this suit is
not applying to enforce the award by entry as a judgment but for the above
declaratory orders. No explanation was forthcoming why the Plaintiff did not
seek to enforce it by entry as a judgment since 3.5.2007, instead of filing this suit
for the declaratory orders.

164
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 …
[10] The Plaintiff has an alternative remedy to enforce the award. S 41 of the
Specific Relief Act 1950 provides that no court shall make any such declaration
where the Plaintiff, being able to seek further relief than a mere declaration or
title, omits to do so … .
Conversely, there is no need to comply with procedures that are not specifically
applicable to applications for recognition and enforcement, like the Reciprocal
Enforcement of Judgments Act 1958. The High Court, in Armada (Singapore) Pte Ltd v.
Ashapura Minechem Ltd [2016] 9 CLJ 709 at paragraph 15, inter alia, held:
In the light of the non-applicability of REJA in the setting aside of the 16 January
2014 order, I am of the view there is:
(a) No requirement for a notice of registration and indorsement of service on
the affidavit proving service as it is a requirement under O. 67 r. 10 of the
ROC 2012; and
P 273
P 274
(b) No requirement for a notification that the execution of the award will not
issue until the expiration of the period as it is a requirement under O. 67 r.
5(2) of the ROC 2012.
The High Court, in Murray & Roberts Australia Pty Ltd v. Earth Support Company (SEA) Sdn
Bhd [2015] 6 CLJ 649 at paragraph 30(a), clarified that an applicant in an application to
recognize and enforce an award did not need a cause of action:
… I am of the considered view that the purpose of s. 38 AA (which provides an
avenue for a party to apply to court to recognise and enforce arbitral awards
where the seat of arbitration is in Malaysia or in a foreign country) will be
defeated if the OS is required in this case to disclose a reasonable cause of
action. As such, O. 18 r. 19(1)(a) RC cannot apply to the OS in this case … .

[B] The Two-Stage Test

Sections 38 and 39 of the Arbitration Act 2005 read together provide for a two-stage test for
the recognition and enforcement of an award. These two stages are as follows:
(1) at the first stage, there must be evidence of a prima facie or apparently valid award
and arbitration agreement; and
(2) at the second stage, if there is such evidence, the enforcement of the award may be
challenged.
These two stages were recognized by the Federal Court, in CTI Group supra at paragraph 66,
where it was, inter alia, held:
Sections 38 and 39 of our Arbitration Act, read with O 69 rr 8 and 9 of the Rules
of Court 2012, provide for a two-stage process:
The first stage is essentially an ex parte proceeding – but subject to the power
of the court as stipulated in para (4) of O 69 r 8 to require service of the
arbitration claim originating summons on a party to the arbitration. An ex parte
order giving permission to enforce an arbitral award is made at this stage.
The second stage is an inter partes proceeding during which the court deals
with the application to set aside an ex parte order giving leave to enforce an
arbitral award. The application must be made within the prescribed time after
that order is served on the party against whom the order is made.
We will now consider these two stages in detail.
[1] Stage 1
The Federal Court, in CTI Group supra at paragraphs 87-91, held that the requirements of
the first stage, which would be ex parte, will be satisfied if there was evidence of a prima
P 274 facie or apparently valid award and arbitration agreement. In the absence of such
P 275 evidence, the courts may refuse to give leave ex parte to enforce the award and may
instead order that the application to enforce be heard inter partes, which would allow the
applicant to adduce fresh evidence:
[87] In our view, the discussion on the differences in the definitions of
‘agreement in writing’ in the various jurisdictions does not detract from the
common position taken by all the cases we have referred to above that all that
the court is required to do at the first stage of the enforcement proceeding is to
satisfy itself that the party seeking enforcement has produced before the court:
(1) the arbitral award sought to be enforced, which prima facie or apparently
is a valid award; and
(2) the arbitration agreement, which is prima facie or apparently a valid

165
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 agreement, between the party seeking to enforce the award and the party
against whom the award is sought to be enforced, and pursuant to which
the award was made.
[88] If the parties are named in the arbitration agreement, or if it is obvious on
the face of the arbitration agreement that they are parties to the agreement,
obviously the ‘apparently valid’ test in Dardana, Lombard-Knight and Dallah, or
the ‘prima facie’ test in Altain, is satisfied. There is nothing more to be done.
The award creditor applying for enforcement has discharged its evidential
burden. Leave must be granted, and the matter must proceed to the second
stage if the award debtor seeks to challenge such leave.
[89] The difficulty arises when the parties are not named in the agreement or it
is not obvious from the agreement that the parties are parties to the
agreement. In such circumstances, can it be said that the evidential burden on
the award creditor seeking enforcement has been discharged?
[90] To our minds, Lord Mance’s judgments in Dardana and in Dallah do not
exclude the possibility of the court refusing leave when the evidential burden
on the award creditor is not discharged.
[91] The inter partes hearing recommended by Hansen JA and Kyron AJA in para
140 of Altain in fact, in our opinion, helps the party seeking enforcement. That
party gets a ‘second chance’, in a manner of speaking, to produce additional
evidence at the first stage that would show, notwithstanding the lack of obvious
reference in the arbitration agreement itself to that party or the party against
whom enforcement is sought, that there is in existence an arbitration
agreement between the parties.
The High Court took a similar approach, in Kluang Health Care Sdn Bhd v. Lee Yong Beng &
Another Case [2016] 1 CLJ 281 at paragraphs 58-60, where it appears to have been
recognized that the complete arbitration agreement need not be produced, where the
arbitration agreement has been included by reference under section 9(5) of the Arbitration
Act 2005:
[58] The court next turns to the application by Lee Yong Beng for an order under
s. 38 of the Arbitration Act. Kluang Healthcare Sdn Bhd objects to the
application for recognition and enforcement on the basis that the mandatory
requirements of s. 38 are not met. It contends that no original arbitration
agreement or award and, certainly no certified true copy of the arbitration
agreement or the award have been produced in court. Under such
circumstances, the application must be dismissed.
P 275
P 276
[59] The court disagrees. The court is satisfied that it has before the court the
proper arbitration agreement. By virtue of s. 9(5) of the Arbitration Act, there is
an arbitration agreement by incorporation … .
[60] There are further reasons why I am satisfied that the requirements of s. 38
have been met. The applicant had itself relied on this same arbitration
agreement when it sought and was granted by the High Court, a stay of the
respondent’s civil action and had the subject matter referred to arbitration.
That course of action has culminated in the arbitration award. I do not believe
the applicant can make any credible or convincing argument that there is no
arbitration agreement in this case bearing in mind the history and genesis of
this arbitration award. The applicant cannot resile and deny the existence of
the arbitration agreement.
The Court of Appeal, in Agrovenus LLP v. Pacific Inter-Link Sdn Bhd & Another Appeal [2014] 4
CLJ 525 at paragraph 13, inter alia, emphasized that a formalistic approach, as opposed to a
substantive approach, should be taken at the first stage in relation to the production of the
award and the arbitration agreement:
In our view, s. 38 reflects the obvious. An applicant for recognition or
enforcement of an award must first satisfy the court that there is an award and
an arbitration agreement that authorised it. That would show of the tribunal
that made the award sought to be recognised and enforced is the tribunal
referred to in the arbitration agreement. Although an objection as to jurisdiction
of the arbitral tribunal could be argued on the basis of the terms of the
arbitration agreement, we accept that a formalistic approach to compliance
with s. 38, by production of the copy of the award and the sale contract of 3
April 2009 relating to the transaction in dispute and containing an arbitration
agreement suffices under s. 38 as prima facie proof.
The High Court initially took the position that the procedure in the Rules of Court 2012 had
to be strictly complied with. For example, the High Court, in DML-MRP Resources (M) Sdn
Bhd v. Global Minerals (Sarawak) Sdn Bhd [2009] MLJU 688 at page 3, held that an
application for the recognition and enforcement of an award was flawed, as the

166
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 intitulement referred to the provision on recognition and enforcement in both the
Arbitration Act 1952 and the Arbitration Act 2005.
However, subsequently, the High Court has taken the position that the rights of the parties
should not be defeated merely due to a failure to comply with procedure. For example, the
High Court, in Pasukhas Constructions Sdn Bhd & Anor v. MTM Millennium Holdings Sdn Bhd
[2015] 1 LNS 591 at paragraphs 3(a) and 10(ii), inter alia, held:
[3] Summarily, the Defendant seeks to set aside the 10/9/2012 ex-parte Order on
grounds that:-
(a) it is irregular for failure to comply with O. 69 r. 8(2)(a) of the ROC 2012 as
the ex parte OS did not state the name and the usual or last known place
of abode or business of the Defendant and it did not contain a statement
of the right to make an application to set aside the order under O. 69 r.
8(8) of the ROC 2012;
…
[10] The Defendant’s argument under this head is without merit as:-
P 276
P 277 …
(ii) … I am inclined to accept the Plaintiffs’ argument that the consensus of
the authorities suggest that the Court is more concerned ‘that the rights of
parties in an action are not to be defeated by technical objections’ …
Similarly, the High Court, in Armada supra at paragraphs 20-22, inter alia, held:
[20] With respect in the circumstances of this case I am of the opinion that the
omission to include the indorsement under O. 69 r. 8(8) of the ROC 2012 does not
nullify the 2010 award. Firstly, I had examined the cause papers ie the OS dated
28 December 2012 (encl. 1) and the affidavit in support of the leave application
to enforce the 2010 award affirmed by Andrew Grimmett on 27 December 2012
and as they were in order I granted the 16 January 2014 order.
[21] Secondly, in Pasukhas Constructions Sdn Bhd & Anor v. MTM Millenium
Holdings Sdn Bhd [2015] 1 LNS 591, one of the grounds of the defendant in setting
aside the ex parte order of the court obtained by the plaintiffs pursuant to an
originating summons seeking to register and enforce the final award under s. 38
of the AA 2005 was it was irregular as amongst others it did not contain a
statement of the right to make an application to set aside the order under O. 69
r. 8(8) of the ROC 2012. I had dismissed the defendant’s application on this issue
….
[22] Thirdly, as highlighted by the plaintiff a comparison can be drawn with
penal indorsements where the penal indorsement that the respondent is liable
to process of execution would sometimes be included in the drawing up of the
order but sometimes omitted; however the omission is not fatal as the drawn up
order could be amended to include the penal indorsement as in Tan Bee Ang v.
Siew Chee Choong [2011] 1 LNS 121 …
[2] Stage 2
Once the applicant has satisfied the two conditions of section 38(2) of the Arbitration Act
2005, the onus shifts to the respondent to satisfy the courts that the award should not be
enforced. In this context, the High Court, in Open Type Joint Stock Company Efirnoye (‘EFKO’)
v. Alfa Trading Ltd [2012] 1 CLJ 323 at paragraphs 30 and 31, inter alia, held:
[30] The plaintiff here has complied with the formal requirements set out in s.
38. The Arbitration Award was made in a state which is a party to the New York
Convention as the Russian Federation is one of the signatory states to the
convention with effect from 29 December 1958.
[31] Given the foregoing, and the express words of s. 39 of the Act, the onus of
proof now shifts to the defendant who opposes the recognition and enforcement
of this Arbitration Award to satisfy the court why the award should not be
registered and enforced … .
The High Court, in Murray & Roberts supra at paragraph 65, inter alia, held:
… The above Malaysian cases have clearly held that once the plaintiff fulfils all
the formal requirements, the legal onus shifts to the defendant to prove any one
P 277 of the nine grounds of refusal. If the defendant is unable to discharge such a
P 278 legal burden, the court has no discretion but to recognise and enforce the
Australian Arbitral Awards under s. 38(1) AA.
The respondent opposing the recognition and enforcement of the award under section 38 is
limited to challenging the applicant’s compliance with the conditions and procedures
referred to above. The respondent is not entitled to argue the merits of the award. The
respondent also cannot raise any ground under section 39 of the Arbitration Act 2005

167
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 unless a separate application is made under this provision. These principles were outlined
by the Court of Appeal, in Alami Vegetable Oil Products Sdn Bhd v. Hafeez Igbal Oil & Ghee
Industries (Pvt) Ltd [2016] 7 CLJ 19 at paragraphs 2, 3, 7 and 8, where it was, inter alia, held:
[2] What is important to note in the instant case is that it is not permissible to
argue issues relating to the award or merit of the award, etc. under s. 38 of the
AA 2005 as the merit of the award cannot be an issue under s. 38, whereas it is
permissible to place such an argument in an application under s. 39 of the AA
2005. The respondent’s application was premised under s. 38 (which has to be
read with s. 39) as evidence in the intitulement to the application found at pp.
14 to 17 vol. 1 Part A of the appeal record. For s. 39 to apply, the application
must be made by the respondent to the award. In this case, the respondent to
the award was the appellant/defendant and no such application had been filed
but only an opposing affidavit stating why the respondent/plaintiff’s
application should not be allowed … .
[3] The appellant had not appreciated the distinction between ss. 38 and 39 of
the AA 2005. Section 38 procedure is a ‘recognition procedure’ to convert an
arbitration award to a judgment. This can only be done by a person holding an
arbitration award. If the respondent to the award wants to object to the
procedure, he can file an affidavit to do so. (See International Bulk Carriers SPA
v. CTI Group Inc [2014] 8 CLJ 854; [2014] 6 MLJ 851). If the respondent to the award
wants to object to its enforcement, then an application under s. 39 setting out
one of the grounds must be made by the respondent to the award. To put it in
another way, the appellant in the instant case was attempting to convince the
court ‘to put the cart before the horse’, that too without making an application
under the mandatory provision to challenge the enforcement of the award.
…
[7] Section 38 is a procedural provision to seek recognition of an award. As long
as the procedure set out in this section is satisfied the award must be
recognised. It is not at this stage for the court to hear arguments related to s. 39
of the AA 2005, unless there is a formal application by the appellant. In the
instant case, there was no argument before the learned trial judge or before us
that procedural requirement for s. 38 was not satisfied … .
[8] As long as there is an award and the procedure in s. 38 is satisfied, the award
needs to be given recognition. Any objection to the legal validity of the award or
any other complaint on the award can only be taken by s. 39 procedure … .
In the instant case, the argument of the appellant may fall within the compass
of s. 39(1)(a)(ii) but it has to be taken by way of an application.

P 278 These views were echoed in the High Court, in Armada supra at paragraphs 33(b), where it
P 279 was, inter alia, held:
Matters going into merits of the arbitration award are strictly of no relevance to
the court in determining whether to allow enforcement of an arbitration award
….
The High Court, in Armada supra at paragraphs 25 and 26, also emphasized that the period
of fourteen days to apply to set aside an ex parte order allowing recognition and
enforcement of an award must be complied with, if not a satisfactory explanation with
sufficient material must be provided:
[25] Bearing in mind the existence of the specific provision wherein the first
limb of O. 69 r. 8(8) of the ROC 2012 specifies that a party may within a period of
14 days ‘after the service of the order giving permission to enforce the award is
served’, I am of the view the general provision of O. 42 r. 13 of the ROC 2012
which specifies that ‘[A] party intending to set aside or to vary such order or
judgment shall make an application to the court and serve it on the party who
has obtained the order or judgment within 30 days after the receipt of the order
or judgment by him’ does not apply.
[26] The plaintiff argued that there is inordinate delay of approximately one
year six months on the defendant’s part in applying to set aside the 16 January
2014 order. In Abdul Latif Mohamed Ibrahim v. International Factors Leasing Pte
Ltd [2001] 2 CLJ 140 at 147 [f-i], Haidar Mohd Noor JCA (as he then was) (delivering
judgment on behalf of the Court of Appeal) opined:
This court in dealing with the delay point in Khor Cheng Wah v.
Sungai Way Leasing Sdn Bhd [1997] 1 CLJ 396 said at p. 401:
It is a cardinal principle of law, that when a litigant seeks
the intervention of the court in a matter that affects his
rights, he must do so timeously. The maxim vigilantibus,
non dormientibus, jura subveniunt, though having its
origins in the Court of Chancery, is of universal

168
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 application. Even in cases where a right is exercisable ex
debito justitiae, a court may refuse relief to an indolent
litigant.
In all cases in which delay in approaching the Court is in
issue, the burden is upon the litigant who has delayed to
render a satisfactory explanation for it. Whether the
explanation in a given case is satisfactory or reasonable
depends upon the facts and circumstances of each case.
And in a matter which involves the exercise of discretion,
it is for the Judge in whom the law primarily vests the
discretion.
The burden therefore falls on the appellant to render
satisfactory explanation or to lay sufficient material for
the court to consider the delay in making the application
for an extension of time.
The Federal Court, in CTI Group supra at paragraphs 92 and 105, held that once an order is
made to enforce an award, at the first stage, that award may only be set aside in the
second stage upon an application under section 39:
[92] However, once an order is made granting leave to enforce an arbitral award,
the case authorities cited before us, including Altain, show that the order can
only be set aside in the second (substantive) stage based on the exhaustive
grounds available at that second stage. This, in our view, is consistent with the
provisions of the Model Law and, in the context of our jurisdiction, with ss 38
and 39 of our Arbitration Act.
…
[105] In our view, the two-stage process for the enforcement of arbitral awards
P 279 as contained in ss 38 and 39 of our Arbitration Act (read with O 69 r 8 of the
P 280 Rules of Court 2012) does not permit a party seeking to set aside an order
made under s 38 to apply to set it aside under that very section on the ground
that there was no arbitration agreement in existence between the parties. That
party must apply to set that order aside under s 39.
P 280
P 281

39. Grounds for Refusing Recognition or Enforcement

(1) Recognition or enforcement of an award, irrespective of the State in which it was made,
may be refused only at the request of the party against whom it is invoked –
(a) where that party provides to the High Court proof that –
(i) a party to the arbitration agreement was under any incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties
have subjected it, or, failing any indication thereon, under the laws of the
State where the award was made;
(iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was otherwise
unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within the
terms of the submission to arbitration;
(v) subject to subsection (3), the award contains decisions on matters beyond
the scope of the submission to arbitration;
(vi) the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties, unless such agreement was in
conflict with a provision of this Act from which the parties cannot derogate,
or, failing such agreement, was not in accordance with this Act; or
(vii) the award has not yet become binding on the parties or has been set aside or
suspended by a court of the country in which, or under the law of which, that
award was made; or
(b) if the High Court finds that –
(i) the subject-matter of the dispute is not capable of settlement by arbitration
under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
(2) If an application for setting aside or suspension of an award has been made to the High
Court on the grounds referred to in subparagraph (1)(a)(vii), the High Court may, if it
considers it proper, adjourn its decision and may also, on the application of the party
claiming recognition or enforcement of the award, order the other party to provide
appropriate security.
(3) Where the decision on matters submitted to arbitration can be separated from those

169
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 not so submitted, only that part of the award which contains decisions on matters
submitted to arbitration may be recognized and enforced.

§39.01 INTRODUCTION
P 281 Section 39 of the Arbitration Act 2005 provides the grounds for an application to prevent
P 282 the recognition and enforcement of an award. Section 39 also provides for the
adjournment of the recognition and enforcement of an award and the security that may
need to be paid in that event.
Section 39 of the Arbitration Act 2005 largely reflects Article 36 of the 1985 Model Law save
for the following differences:
(1) the words ‘at the request of the party against whom it is invoked’ have been included
in section 39(1) of the Arbitration Act 2005. These words are not in Article 36(1) but in
Article 36(1)(a) of the 1985 Model Law. The significance of this difference is considered
in §39.05 infra;
(2) the words ‘the party making the application’ in section 36(1)(a)(iii) of the Arbitration
Act 2005 substitute the words ‘the party against whom the award is invoked’ in Article
36(1)(a)(ii) of the 1985 Model Law;
(3) sections 39(1)(a)(iv) and (v) and 39(3) of the Arbitration Act 2005 reflect Article 36(1)(a)
(iii) of the 1985 Model Law. However, only the second limb in section 39(1)(a)(v) is
expressly subject to section 39(3);
(4) the words ‘unless such agreement was in conflict with a provision of this Act, from
which the parties cannot derogate, or, failing such agreement, was not in accordance
with this Act’ in section 39(1)(a)(vi) of the Arbitration Act 2005 substitute the words
‘failing such agreement, was not in accordance with the law of the country where the
arbitration took place’. The significance of this is considered in §39.06[E] infra;
(5) the words ‘to the High Court on the grounds referred to in paragraphs (1)(a)(vii)’ in
section 39(2) of the Arbitration Act 2005 substitute ‘to a court referred to in paragraph
(1)(a)(v) of this article’; and
(6) the word ‘only’ in section 39(3) of the Arbitration Act 2005 is not found in Article 36(1)
(a)(iii) of the 1985 Model Law. This appears to be merely a change in drafting.
The foregoing reflects the position under section 39 of the Arbitration Act 2005 as amended
by the Arbitration (Amendment) Act 2011. Prior to the amendments in 2011, there were
further significant differences between section 39 of the Arbitration Act 2005 and Article 36
of the 1985 Model Law.
The amendments brought section 39 of the Arbitration Act 2005 closer to Article 36 of the
1985 Model Law. This was achieved by:
(1) amending section 39(1)(a)(ii), of the Arbitration Act 2005, which provided for the ‘laws
of Malaysia’ to provide now for ‘laws of the State where the award was made’ in
accordance with Article 36(1)(a)(i) of the 1985 Model Law; and
(2) including section 39(3) of the Arbitration Act 2005, which reflects the proviso to Article
36(1)(a)(iii) of the 1985 Model Law.
Article 36 of the 1985 Model Law in turn reflects Articles V and VI of the 1958 New York
Convention. This is intentional, as discussed in §38.01 supra.
P 282
P 283

§39.02 ‘RECOGNITION AND ENFORCEMENT OF AN AWARD, IRRESPECTIVE

OF THE STATE IN WHICH IT WAS MADE …’
Section 39(1) of the Arbitration Act 2005 provides for the recognition and enforcement of an
award ‘irrespective of the State in which it was made’. This provision is qualified by
sections 38(1) and (4) of the Arbitration Act 2005, which limit recognition and enforcement
to States that are a party to the New York Convention, as discussed in §38.04 supra.
The High Court, in Twin Advance (M) Sdn Bhd v. Polar Electro Europe BV [2013] 3 CLJ 294 at
paragraphs 27-29, confirmed that the use of the words ‘irrespective of the State in which
the award was made’ in section 39(1) meant that it was an exception to section 3 of the
Arbitration Act 2005. Section 39 applied regardless of where the award was made and is
not limited by section 3 to an arbitration with a seat in Malaysia.
The High Court, in Lebas Technologies Sdn Bhd v. Malaysian Bio-Excell Sdn Bhd [2018] MLJU
741 at paragraph 26, clarified that section 39(1) only allowed the courts to refuse to
recognize an award and not to suspend the enforcement of an award:
Section 39(1) of the Arbitration Act permits a refusal to recognise or enforce an
arbitration award. It does not provide for any stay of an application to enforce
or a suspension of the enforcement of an arbitration award. At the risk of being
pedantic, the orders sought by the Defendant are therefore not within the
provisions of section 39 of the Arbitration Act.

§39.03 ‘… MAY BE REFUSED …’

170
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Section 39(1) of the Arbitration Act 2005 provides that recognition and enforcement ‘may
be refused’ on the grounds set out in sections 39(1)(a) and (b).
Even if one of the grounds set out in sections 39(1)(a) and (b) is proved, the court retains a
discretion whether to refuse recognition and enforcement, as expressly provided for by the
use of the word ‘may’ in section 39(1). This can be seen from the judgment of the Court of
Appeal, in Agrovenus LLP v. Pacific Inter-Link Sdn Bhd & Another Appeal [2014] 4 CLJ 525 at
paragraph 30.
The courts are likely to exercise this discretion against refusing recognition and
enforcement, in accordance with the principle of minimal interference, which is
considered in §39.04 infra.

§39.04 ‘… ONLY …’
Section 39(1) of the Arbitration Act 2005 provides that recognition and enforcement of an
award may ‘only’ be refused on the specified grounds listed.
The courts have repeatedly emphasized that a policy of minimal interference will be
P 283 adopted in relation to section 39. This means that the courts will only intervene where one
P 284 of the grounds in section 39 exists. These grounds are exhaustive. Unless the applicant
proves one of these grounds, the courts will recognize and enforce an award as a matter of
course.
For example, the High Court, in Taman Bandar Baru Masai Sdn Bhd v. Dindings Corporations
Sdn Bhd [2010] 5 CLJ 83 at paragraph 33 (c), inter alia, held:
I will say AA 2005 makes it compulsory for courts to respect the decision of
arbitrators and only minimum intervention is allowed. In this respect, it must
not be forgotten that it is the parties who selected the arbitrator and s. 36 of AA
2005 makes the award final, binding and conclusive. And real proof is required
to be shown before the court can meddle with the award … .
Subsequently, the High Court, in Bauer (M) Sdn Bhd v. Embassy Court Sdn Bhd [2010] MLJU
1323 at paragraph 19, inter alia, held:
… It was clearly therefore the intention of the legislature when the 2005 Act was
brought into force to accord to arbitral awards a status and recognition that
could only be defeated or challenged on those specific grounds or
circumstances now entrenched as law. In other words, it should be as a matter
of course that arbitral awards be recognized and judgments entered by the
courts on those award for purposes of enforcement, unless the court is satisfied
that its discretion to do so is restricted by Section 39.
Similarly, the High Court, in Murray & Roberts Australia Pty Ltd v. Earth Support Company
(SEA) Sdn Bhd [2015] 6 CLJ 649 at paragraph 62, inter alia, held:
… Section 8 AA provides for a ‘minimalist’ approach by courts whereby judicial
intervention in arbitral matters is only allowed if it is so provided in AA. If a
ground is not provided in s. 39(1)(a) and (b) AA, the defendant cannot thus rely
on such a ground … .
… the nine grounds of refusal are exhaustive. Hence, the defendant cannot rely
on any ground which is not stipulated in s. 39(1)(a) and (b) AA, to persuade this
court to refuse recognition and/or enforcement of the Australian Arbitral
Awards.
The High Court, in Lebas Technologies supra at paragraphs 39 and 45, held:
[39] In regard to arbitral awards, there are specific grounds provided under
section 39 of the Arbitration Act as to when their recognition or enforcement
may be refused. This leaves no room for the Courts to admit of other grounds not
provided. To do so would run counter to the legislative intent of the Arbitration
Act. I would add that the legislative intent, even from the provisions of the
Arbitration Act itself, is sufficiently apparent.
…
[45] Regrettably, the last sentence in the Explanatory Statement could have
been better worded. Nevertheless, the idea is still consistent with the view that
is generally espoused and that is, in situations where there are express
provisions in the Arbitration Act, there is no room for judicial intervention.
The courts have also emphasized minimal interference based on the relationship between
an application to resist enforcement and an application to set aside an award. In this
context, the courts regard an application to resist enforcement as the flip side of an
application to set aside an award, as the grounds are similar.
P 284
P 285
Therefore, for domestic arbitrations, these two applications should be heard together.

171
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Where the applications are not heard together, the first which is heard and decided will
determine the second application.
A party will not be entitled to a second bite at the cherry. For example, if an application to
set aside has been dismissed, this decision will be determinative of any subsequent
application to resist enforcement of the award on the same grounds.
In this context, the High Court, in Kelana Erat Sdn Bhd v. Niche Properties Sdn Bhd & Another
Case [2013] 4 CLJ 1172 at paragraph 62, held that an application to set aside and an
application to resist enforcement of an award are ‘two sides of the same coin’ and there
was accordingly ‘no need to rehash the arguments’.
Similarly, the High Court, in JHW Reels Sdn Bhd v. Syarikat Borcos Shipping Sdn Bhd [2012]
MLJU 1790 at paragraph 25, inter alia, held:
… Given the obvious overlaps between s. 37 and s. 39, it would have made
practical sense to have both applications heard before one court and before
the same judge. As it now stands, the application to set aside is being heard
after the other court has allowed the defendant’s application to register the
award. To accede to the plaintiff’s application here will be to allow the plaintiff
to have the proverbial second bite of the cherry.
Apart from this, in a domestic arbitration, where an application to set aside an award has
not been made, it is unclear whether a party may be precluded from applying to resist
enforcement on the grounds that could have been raised in an application to set aside.
The High Court, in Bauer supra, held that a party would be precluded from resisting
enforcement after having failed to apply to set aside an award. However, recently, the High
Court, in Kejuruteraan Bintai Kindenko Sdn Bhd v. Serdang Baru Properties Sdn Bhd &
Another Case [2018] 1 CLJ 369, held that a party would be entitled to resist enforcement
even if an application to set aside the award had not been made. It is submitted that the
approach in Kejuruteraan Bintai Kindenko supra should be preferred, as otherwise section
39 may be redundant.
In this context, the High Court, in Bauer supra at paragraph 16, inter alia, held:
… The failure of the Defendant to initiate any such application to set aside the
Interim Award within the time specified, that is by the Defendant’s own
inaction, precludes the Defendant from now challenging the Interim Award of
the learned Arbitrator of the 14.01.2010.
However, the High Court, in Kejuruteraan Bintai Kindenko supra at paragraph 33, held that:
… The reproduction in section 39 following the same grounds in a setting aside
of an award under section 37 cannot be for decorative purposes but for the
deliberate design of permitting the same grounds not raised because there was
no previous application to set aside under section 37 to be raised in resisting or
opposing an application under section 39 of the AA 2005. The repetition of the
same grounds has nothing to do with it being redundant but everything to do
with reiteration as in making those same grounds available in resisting an
enforcement application under section 39 of the AA 2005.
P 285
P 286
In international arbitrations, with a seat of arbitration outside Malaysia, the courts are
reluctant to prevent enforcement of an award on the grounds that could have been raised
in an application to set aside at the seat. Similarly, if an application to set aside at the
seat has been made but has been dismissed, the courts are unlikely to allow an
application to resist the enforcement of the award on the grounds that have been
dismissed by the court at the seat of arbitration. Generally, the courts draw a distinction
between the supervisory court at the seat of arbitration and the enforcement court where
the award is sought to be enforced. The courts take the position, based on the principle of
minimal interference, that an objection to the award should be taken before the
supervisory court and not the enforcement court.
These principles were considered in detail by the High Court, in Murray & Roberts supra at
paragraph 69(b), where it was, inter alia, held:
… this court cannot consider the merits of the Australian Arbitral Awards. Nor
can the court allow the defendant to raise any issue which the defendant could
have raised before the Australian Arbitrator or the Australian supervisory courts.
The issues regarding defendant’s liability and extent of liability as well the
plaintiff’s alleged failure to mitigate loss, concern the merits of the Australian
Arbitral Awards which this court cannot consider.
The Court of Appeal, in Sintrans Asia Services Pte Ltd v. Inai Kiara Sdn Bhd [2016] 5 CLJ 746 at
paragraph 16, confirmed these principles in relation to international arbitration:
The court in Malaysia is purely an enforcement court and must recognise a valid
arbitration award save and except for the exception provided under the law. If

172
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the defendant in this case argues that the arbitration clause is not valid then
they would have to establish that it is so under the Singapore law. And the
matter would have to be dealt with by the courts having supervisory jurisdiction
at the seat of arbitration ie, the Singapore courts or in the arbitration
proceeding itself.
These principles were reiterated by the High Court, in Armada (Singapore) Pte Ltd v.
Ashapura Minechem Ltd [2016] 9 CLJ 709 at paragraph 33(c):
The proper place to challenge the validity of the arbitration award should be at
the seat of arbitration, ie the English court who is the supervisory court rather
than in this court who is merely an enforcement court … .

§39.05 ‘… AT THE REQUEST OF THE PARTY AGAINST WHOM IT IS INVOKED

…’
As stated under §39.01 supra, the words ‘at the request of the party against whom it is
invoked’ in Article 36(1)(a) of the 1985 Model Law were moved in the Arbitration Act 2005
from section 39(1)(a), where these words should have appeared to reflect the 1985 Model
Law, to section 39(1).
Due to this change, the courts have interpreted section 39(1) as requiring, in any
circumstance, an application to be made by the party against whom the award is sought to
be enforced.
P 286
P 287
Furthermore, the courts have interpreted section 39(1) to mean that the courts cannot act
on their own motion under even 39(1)(b).
This can be seen from the judgment of the High Court in Murray & Roberts supra at
paragraph 65:
… I am not inclined to accept that the court may act of its own motion under s.
39(1)(b)(i) and (ii) AA. If the court may act suo motu under s. 39(1)(b)(i) and (ii) AA,
this is contrary to the ‘minimalist’ approach embedded in s. 8 AA and explained
by the Court of Appeal in Capping Corp Ltd and SDA Architects. The above
Malaysian cases have clearly held that once the plaintiff fulfils all the formal
requirements, the legal onus shifts to the defendant to prove any one of the
nine grounds of refusal. If the defendant is unable to discharge such a legal
burden, the court has no discretion but to recognise and enforce the Australian
Arbitral Awards under s. 38(1) AA.
The need for an application under section 39 is emphasized by the Court of Appeal, in
Alami Vegetable Oil Products Sdn Bhd v. Hafeez Iqbal Oil & Ghee Industries (Pvt) Ltd [2016] 7
CLJ 19 at paragraph 2:
… For s. 39 to apply, the application must be made by the respondent to the
award. In this case, the respondent to the award was the appellant/defendant
and no such application had been filed but only an opposing affidavit stating
why the respondent/plaintiff’s application should not be allowed … .
The need for an application under section 39 has now been confirmed by the Federal Court,
in CTI Group Inc v. International Bulk Carriers SpA [2017] 5 MLJ 314 at paragraph 105:
In our view, the two-stage process for the enforcement of arbitral awards as
contained in ss 38 and 39 of our Arbitration Act (read with O 69 r 8 of the Rules of
Court 2012) does not permit a party seeking to set aside an order made under s
38 to apply to set it aside under that very section on the ground that there was
no arbitration agreement in existence between the parties. That party must
apply to set that order aside under s 39.

§39.06 GROUNDS FOR REFUSING RECOGNITION AND ENFORCEMENT

The grounds for refusing recognition and enforcement of an award are set out in sections
39(1)(a) and (b) of the Arbitration Act 2005. These grounds reflect the grounds for setting
aside an award in sections 37(1)(a) and (b) of the Arbitration Act 2005 save for certain
alterations, which are as follows:
(1) section 37(1)(a)(ii) provides that the laws of Malaysia will apply to the arbitration
agreement if there is no indication which law is to apply, while section 39(1)(a)(ii)
provides that the law of the State where the award was made will apply to the
arbitration agreement in the absence of any other indication. This difference arises
P 287 because section 37 is dealing with the setting aside of an award, which may only
P 288 occur at the seat of the arbitration, that is where the award was made. As an award
may only be set aside in Malaysia, where Malaysia is the seat, section 37(1)(a)(ii) only
provides for the laws of Malaysia as the default law to be applied. However, an award
made in any State may be sought to be enforced in Malaysia, and that is why section
39(1)(a)(ii) has to provide for the State in which the award was made as the default

173
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 law applicable to the arbitration agreement; and
(2) section 39(1)(a)(vii) does not have a corresponding provision in section 37(1)(a). This is
because section 39(1)(a)(vii) provides for a scenario that cannot arise in the context of
an application to set aside an award under section 37(1). That is a scenario where a
party seeks enforcement of an award in Malaysia, while the award has not yet
become binding or has been set aside or suspended in another State. This scenario
should not arise under section 37, as the courts in Malaysia will be the supervisory
courts that have the power to suspend or set aside the award and not a court in
another State.
The grounds in sections 37(1) and 39(1) do, however, overlap to a large extent and this has
been recognized by the courts, as discussed in §39.04 supra. This overlap is due to both
sections reflecting Articles V and VI of the 1958 New York Convention, which was intended in
the 1985 Model Law.
Like section 37(1), section 39(1) is divided between grounds the applicant is required to
prove, as set out in section 39(1)(a), and ground upon which the court is entitled to act on
its own motion, as set out in section 39(1)(b). However, this distinction has been somewhat
blurred, by the judgment of the High Court, in Murray & Roberts supra, which decided that
proof was required for the grounds under both sections 39(1)(a) and (b).
The courts have repeatedly emphasized the need for the applicant to prove the grounds
relied on under section 39(1)(a). (8) The burden of proving these grounds is on the
applicant, once the party seeking to enforce the award has satisfied the requirements
under section 38.
In this context, the High Court, in The Government of India v. Cairn Energy India Pty Ltd & Ors
[2014] 9 MLJ 149 at paragraphs 127 and 128, inter alia, held:
[127] The requirement of ‘proof’ is also to be found in s 39 of Act 646. Although
this requirement is in relation to the grounds for refusing recognition or
enforcement of an award (note the earlier observations of the UNCITRAL
Secretariat’s explanatory note on this), the approach of other courts concerning
such a requirement is of good guidance. In this respect, the House of Lords’
decision in Dallah Real Estate and Tourism Holding Co v. Ministry of Religious
Affairs of the Government of Pakistan [2011] 1 AC 763 at p 813 is of some
relevance.
[128] Lord Mance JSC opined that the respondent in that case had taken the
‘correct position’ on the issue of who bears the onus of proving the matters
alleged of; that is was with the party objecting to the recognition of the award;
that the ‘objecting party has the burden of proof, which it may seek to discharge
as it sees fit’. Therefore, the burden of proving the present grounds of challenge
lies with the plaintiff.
P 288
P 289
This was confirmed by the Court of Appeal, in Agrovenus supra at paragraph 16, where it
was, inter alia, held:
The respondent, in this case, is clearly the party against whom the recognition
or enforcement of the award is invoked and who is requesting refusal. Section
39(1)(a) requires that it must satisfy the High Court with proof of any of the
grounds set out in paras. (i) to (vii) thereof that it relied upon … .
The need for proof of the grounds relied on was again emphasized by the High Court, in
Perembun (M) Sdn Bhd v. Binas BMK Sdn Bhd and another case [2015] 11 MLJ 447 at
paragraph 48:
Contrary to Perembun’s contentions, none of the allegations or complaints
resonate in any of the grounds relied on. I do not find any of the grounds proved,
be it under ss 37 or 39; and these sections do require Perembun to prove its
charges. It has not.
As mentioned above, the need for proof has also been extended to the grounds under
section 39(1)(b), by the High Court in Murray & Roberts supra at paragraph 65.
Therefore, all the grounds, regardless as to whether they are under section 39(1)(a) or (b),
must be proved. We now turn to consider each of these nine individual grounds, seven
under section 39(1)(a) and two under section 39(1)(b).

[A] Incapacity of Party

Section 39(1)(a)(ii) of the Arbitration Act 2005 provides that an award may not be
recognized where a party to the arbitration agreement was under any incapacity. Section
39(1)(a)(i) reflects the ground for setting aside an award under section 37(1)(a)(i), and
reference should be made to the commentary under §37.03 supra.
Section 39(1)(a)(i) does not provide under which law the incapacity of a party is to be
determined. The applicable law as to the incapacity of a party will accordingly be

174
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 determined in accordance with the conflicts of laws rules applicable in Malaysia. (9)

[B] Invalidity of Arbitration Agreement

Section 39(1)(a)(ii) of the Arbitration Act 2005 provides that an award may not be enforced
where the arbitration agreement is invalid under the law the parties have agreed to or, in
the absence of such agreement, the law where the award was made.
Section 39(1)(a)(ii) was amended by the Arbitration (Amendment) Act 2011. Prior to this
amendment, in the event the parties had not agreed on the applicable law, the default law
would be the laws of Malaysia. This was inconsistent with Malaysia’s obligations under the
New York Convention and was accordingly amended in 2011. The Court of Appeal, in
Agrovenus supra at paragraph 217, confirmed that this amendment would not have
retrospective effect.
P 289
P 290
Apart from this, section 39(1)(a)(ii) reflects the ground for setting aside in section 37(1)(a)(ii)
and reference should be made to the commentary under §37.03[B] supra. If the parties
have agreed that the laws of Malaysia should apply to the arbitration agreement, or in the
absence of agreement, if the award was made in Malaysia, reference should also be made
to the commentary under §9.01-§9.03 supra.
The courts will give effect to the law agreed by the parties to be applicable to the
arbitration agreement. The courts are reluctant to consider the validity of the arbitration
agreement, where the party resisting enforcement of the award had not raised this issue in
the arbitral proceedings or in the proceedings to set aside the award.
This can be seen from the judgment of the Court of Appeal, in Agrovenus supra at
paragraphs 30(b) to (d), where it was, inter alia, held:
(b) the respondent, in this case, raised the objection as to the jurisdiction of
the arbitral tribunal for the first time at the High Court in Malaysia when
the appellant sought recognition or enforcement of the award by the
arbitral tribunal. Given that arbitral tribunal proceedings are not informal
proceedings, but are undertaken by parties with the clear intention of
obtaining a decision that settles the dispute between the parties, parties
cannot be unaware if the arbitral tribunal lacks jurisdiction because
jurisdiction is conferred by the parties;
(c) yet no explanation was given for the failure to object to jurisdiction before
the arbitral tribunal, particularly since English law would require the
respondent to have made the objections as to jurisdiction before the
arbitral tribunal or lose the right to make the objection. The objection
made only after having participated fully in the arbitration at all times,
and even then only when the appellant sought recognition or enforcement
of the award by the High Court suggests the respondent took part in the
proceedings before the arbitral tribunal while keeping it up its sleeve the
objection as to jurisdiction to be used to challenge the award if the award
went against it. We agree with the description in Rustall Trading Ltd v Gill
& Duffus SA [2000] 1 Lloyd’s Rep 14 that this is a fundamental principle of
objection. A party cannot seek to have its cake and at the same time eat it
too; and
(d) furthermore, the fact of failure to object at the proceedings before the
arbitral tribunal and thus causing all parties to act on the basis the
respondent accepted that the arbitral tribunal had jurisdiction or scope
certainly does not commend itself to an exercise of discretion in favour of
the respondent to refuse recognition or enforcement of the award. It calls
properly for the application of the doctrine of estoppel as enunciated in
Boustead Trading (1985) Sdn Bhd v Arab-Malaysia Merchant Bank Bhd [1995]
3 MLJ 331 (FC).
This can also be seen from the judgment of the Court of Appeal, in Sintrans Asia Services Pte
Ltd v. Inai Kiara Sdn Bhd [2016] 5 CLJ 749 at paragraphs 15 and 16, where it was, inter alia,
held:
[15] The validity of the arbitration agreement which we have referred to is to be
determined by the law of the country where the award was made. In our
particular case since the seat of the arbitration was in Singapore, the anchor or
juridical home by which the arbitration clause is to be assumed is the laws
applicable in Republic of Singapore. The arbitration clause is clear in terms
P 290 and parties have subjected themselves to be bound by it. Upon a careful
P 291 examination of s. 39(1)(a)(ii) and since the arbitration agreement clearly
provides the law applicable to the arbitration agreement, the learned judge
erred in law in subjecting the same to Malaysian law.
[16] The court in Malaysia is purely an enforcement court and must recognise a
valid arbitration award save and except for the exception provided under the
law. If the defendant in this case argues that the arbitration clause is not valid

175
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 then they would have to establish that it is so under the Singapore law. And the
matter would have to be dealt with by the courts having supervisory jurisdiction
at the seat of arbitration ie, the Singapore courts or in the arbitration
proceeding itself.

[C] Notice and Inability to Present Case

Section 39(1)(a)(iii) of the Arbitration Act 2005 provides that an award may be set aside
where a party has not been given proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to present this case.
Section 39(1)(a)(iii) reflects the ground for setting aside in section 37(1)(a)(iii), and reference
should be made to the commentary under §37.03[C] supra.

[D] Jurisdiction
Sections 39(1)(a)(iv) and (v), as well as section 39(3), of the Arbitration Act 2005 should be
read together. This is because these three sections are based on Article 36(1)(a)(iii) of the
1985 Model Law, which is in turn based on Article V(1)(c) of the New York Convention.
These sections of the Arbitration Act 2005 provide that an arbitration award may not be
enforced where:
(1) the dispute is not within the ‘submission to arbitration’ in the sense that the dispute
is outside the arbitration agreement; or
(2) the decision in the award is beyond the ‘scope of the submission’ meaning the
mandate given by the parties to the arbitral tribunal.
In the latter situation, the parts of the decision which are within the mandate given by the
parties may be enforced.
It is important to bear in mind that these sections deal with situations where the arbitral
tribunal has exceeded their jurisdiction. The arbitral tribunal does have jurisdiction in
these situations, but the jurisdiction they have has been exceeded. Where it is contended
that the arbitral tribunal has no jurisdiction at all, section 39(1)(a)(ii) rather than (iv) and (v)
would be applicable.
Sections 39(1)(a)(iii), (iv) and 39(3) reflect the grounds for setting aside an award under
sections 37(1)(a)(iv), (v) and 37(3) and reference should accordingly be made to the
commentary under §37.03[D] supra.
P 291
P 292
The courts have generally emphasized that the source of the jurisdiction of the arbitral
tribunal is the arbitration agreement. (10) So long as the award is generally within the
scope of the arbitration agreement, the courts are unlikely to refuse to enforce an award
on the grounds of excess of jurisdiction. The courts are also reluctant to refuse to enforce
an award on the ground that the decision is outside the pleadings delivered by the parties.
The ‘scope of the submission’ does not appear to be limited by the pleadings. The outer
limits of the scope would appear to be the arbitration agreement. It is unclear, however,
how this would be further limited by the mandate given by the parties. This mandate does
not appear to be based on the pleadings alone and may extend to the evidence led by the
parties and the submissions made.
The High Court, in Kejuruteraan Bintai Kindenko supra at paragraphs 40 and 42, relied on
section 39(3) of the Arbitration Act 2005 to ‘excise’ parts of the award which dealt with pre-
award interest, which the arbitral tribunal had no jurisdiction to grant:
[40] However there is no need to set aside the whole of the Award as the saving
provision in section 39(3) AA 2005 allows the matter not submitted as in could
not be submitted to arbitration to be excised from and separated from the
matters submitted to Arbitration.
…
[42] The part that is affected and infected with respect to the pre-award
interest can be clearly and clinically severed or excised from the part of the
Award that is intact, which integrity has not been compromised or
contaminated in any way by the pre-award interest element.

[E] Composition and Procedure

Section 39(1)(a)(vi) of the Arbitration Act 2005 provides that an award may not be enforced
where the composition of the arbitral tribunal or the procedure was not in accordance
with:
(1) the agreement of the parties, unless such agreement was contrary to non-derogable
provisions of the Act;
(2) the provisions of the Act, in the absence of such an agreement.
Section 39(1)(a)(vi) reflects the ground to set aside in section 37(1)(a)(vi). However, section
39(1)(a)(vi) should not have been identical to section 37(1)(a)(vi). This is because section

176
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 39(1)(a)(vi) needs to deal with international aspects of arbitration but section 37(1)(a)(vi)
need not. This can be seen from both Article 36(1) (iv) of the 1985 Model Law and Article V(1)
(d) of the New York Convention. Under these provisions, in the absence of an agreement on
P 292 the composition of the arbitral tribunal or the arbitration procedure, ‘the law of the
P 293 country where the arbitration took place’ will apply. This differs from section 39(1)(a)(vi),
which imposes the provisions of the Arbitration Act 2005 on composition and procedure on
an arbitration that may have taken place in another country.
This appears to be a fundamental error in the drafting of section 39(1)(a)(vi), which may
result in a breach of Malaysia’ obligations under the 1958 New York Convention. This error,
like the error in section 39(1)(a)(ii) that has been corrected, should be corrected by an
amendment to the Arbitration Act 2005.
Apart from this, the express provision in section 39(1)(a)(vi) that the agreement on
composition and procedure should be subject to the non-derogable provisions of the
Arbitration Act 2005 is contrary to the ethos of Article 36(1)(iv) of the 1985 Model Law and
Article V(1)(d) of the New York Convention which both give supremacy to the agreement
between the parties. There is no need for any qualification to this supremacy by reference
to the non-derogable provisions of the Act as any such fundamental conflict will result in
the award not being enforced under section 39(1)(b)(ii). (11)
Parties have rarely relied on this provision, as the composition of the arbitral tribunal
usually follows the agreement of the parties. As to arbitration procedure, most published
rules of arbitration allow the arbitral tribunal considerable discretion, thus making it
difficult to resist the enforcement of an award on this ground.
The High Court, in Open type Joint Stock Company Efirnoye (‘EFKL’) v. Altas Trading Ltd [2012]
1 CLJ 323 at paragraph 5, considered an unusual agreement on procedure:
Pursuant to Additional Agreement No. 6, the plaintiff and the defendant agreed
that cl. 6 above would be varied to read as follows:
6. ARBITRATION
6.1 All disputes between the parties in connection with the non-fulfillment or
improper fulfillment of the conditions of the contract shall be resolved by
means of negotiation.
6.2 If the parties cannot come to mutual agreement, then dispute should be
passed for considering and final resolution to international Commercial
Arbitration Court at the Chamber of Commerce and Industry of Ukraine (the place
for legal investigation is Kiev, Ukraine) according to its regulations with three
arbitrators present in case when the plaintiff is the Seller, and the dispute should
be passed for considering and final resolution to international Commercial
Arbitration Court at the Chamber of Commerce and Industry of Russian Federation
(the place of legal investigation is Moscow, the Russian Federation) according to
its regulations with three arbitrators present in case when the Plaintiff is the
Buyer.
When the dispute is considered in the given courts, the norms of the substantive
and procedural laws of Ukraine when the Plaintiff is the seller is applied; the
norms of the substantive and procedural laws of Russia when the Plaintiff is the
Buyer is applied. (emphasis added).
The High Court held that two arbitrations commenced by a party, one as seller and the
P 293 other as buyer, in Kiev and Moscow respectively, were in accordance with the procedure
P 294 agreed upon. The High Court did not accept the contention that once the arbitration in
Kiev had been commenced a subsequent arbitration based on the same contract should
not have been commenced in Moscow. In reaching this decision, the High Court
emphasized that the disputes being determined in the two arbitrations differed. This
decision shows that the courts will be reluctant not to enforce an award merely because
the procedure agreed upon is unusual.

[F] Not Binding, Suspended or Set Aside

Sections 39(1)(a)(vii) and 39(2) of the Arbitration Act 2005 provide for three distinct but
related grounds to refuse enforcement of an award:
(1) where the award has not yet become binding;
(2) where the award has been set aside or suspended; and
(3) where an application has been made to set aside or suspend an award, in which
event an adjournment may be granted.
These three grounds will be considered sequentially below.
[1] Not Binding
An award may not be enforced when it has not yet become binding. This necessarily raises
the question when does an award become binding. Section 36(1) of the Arbitration Act 2005
provides that an award is binding when it is made. (12) However, section 38(1) of the
Arbitration Act 2005 requires that an application be made to the High Court for recognition

177
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 that an award is binding. (13)
The legislative history of Article V(1)(e) of the New York Convention, on which section 39(1)
(a)(vii) is based, indicates that the word ‘binding’ was used to avoid ‘double exequatur’
that would require leave to enforce to have first been obtained in the country of origin. (14)
Therefore, it is clear that leave to enforce need not be obtained before an award becomes
binding. However, when exactly an award becomes binding remains unclear. Generally,
this question has been determined based on the law applicable to the award or the law of
the country of origin of the award. In the case of an award to which the laws of Malaysia
apply, or which was made in Malaysia, it would appear that an award would be binding
from the time it was made or upon an application for recognition under section 36(1) or
38(1) respectively. This may however lead to a situation where leave to enforce is required
for an award to be binding, as this is a requirement of the country of origin. This would
defeat the intent behind the use of the word ‘binding’, which is to prevent ‘double
exequatur’.
P 294
P 295
Therefore, it has been suggested that the word ‘binding’ should be given an autonomous
meaning that is not dependent on the law applicable to the award or the country of origin.
(15) The autonomous interpretation of the term ‘binding’ is that an award is binding when
there is no longer any ordinary means of recourse against the award in the place the award
was made. A distinction is drawn between ordinary and extraordinary means of recourse
based on the legislative history of Article V(1)(e) of the New York Convention. Ordinary and
extraordinary means of recourse are civil law concepts. An ordinary means of recourse is
where a decision may be appealed on the merits. While, extraordinary means of recourse
are appeals based on irregularities, particularly procedural ones. It is suggested that an
award is not yet binding when it may be appealed on the merits to another arbitral
tribunal or the courts. This fits into the distinction in Article V(1)(e) of the New York
Convention and section 39(1)(a)(vii) of the Arbitration Act 2005 between the award not yet
being binding or having been set aside or suspended. The award not being binding is
where there is ordinary recourse based on the merits. The award being set aside or
suspended is based on extraordinary recourse due to an irregularity. (16)
[2] Set Aside or Suspended
An award may not be enforced where it has been set aside. In this context, the award must
have been set aside. An application to set aside would be insufficient. Where only an
application has been made, a party would need to rely on section 39(2) of the Arbitration
Act 2005 rather than section 39(1)(a)(vii).
The award must also have been set aside by the court of the country in which the award
was made. This follows the universally accepted practice that an application to set aside
must be made at the place of arbitration as can be seen in §39.04 supra.
Alternatively, the award may be set aside ‘under the law of which, that, award was made’.
This phrase provides for the extremely rare occurrence in practice that the award is
governed upon the agreement of the parties by a law different from the law of the place of
arbitration.
The use of the words ‘… may be refused …’ in section 39(1) of the Arbitration Act 2005 means
that the courts have a discretion whether to refuse enforcement of an award even where
one of the grounds in sections 39(1)(a) and (b) is established. (17)
This means that the courts may enforce an award in Malaysia even if the award has been
set aside at the place of arbitration. This rather unusual situation has yet to occur in
Malaysia but can be seen in judgments from France and the United States of America. (18)
P 295
P 296
An award may also not be enforced where it has been suspended. The meaning of
‘suspended’ in section 39(1)(a)(vii) of the Arbitration Act 2005 is unclear. The word is also
used in Article 36(1)(a)(v) of the 1985 Model Law and Article V(1)(e) of the New York
Convention. Based on the legislative history of the New York Convention, ‘suspended’
appears to mean that the enforcement of the award has been suspended. (19)
[3] Application to Set Aside or Suspend
The intent of section 39(2) of the Arbitration Act 2005 is that the enforcement of an award
may be adjourned by the courts of Malaysia where there is a pending application to set
aside or suspend the award in the courts of the place of arbitration.
This appears to be the intent of section 39(2), as this is what is effectively provided for in
Article 36(2) of the 1985 Model Law and Article VI of the New York Convention.
Unfortunately, the words ‘made to the High Court on the grounds referred to in
subparagraph (1)(a)(vii)’ have been used in section 39(2), instead of ‘made to a court
referred to in paragraph (1)(a)(v)’ as in Article 36(2) of the 1985 Model Law or ‘made to a
competent authority referred to in Article V(1)(e)’ in the New York Convention.
This appears to be a drafting error. The intention cannot be that the enforcement of an

178
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 award will only be adjourned if there is a pending application to set aside or suspend the
award in the High Court, which is defined by section 2(1) of the Arbitration Act 2005 as the
High Court of Malaya or Sabah and Sarawak. The intention must be that that an
adjournment of the enforcement of the award will be allowed when there is a pending
application to set aside or suspend, regardless of whether the application is pending in
Malaysia or at the place of arbitration.
If there is a pending application to set aside or suspend, the courts have a discretion
whether to adjourn the enforcement of the award. The discretion granted to the courts is
clear from the use of the words ‘may, if it considers it proper’.
The question then is how will the courts exercise this discretion. The courts will have to
weigh the legitimate rights of the party applying to set aside or suspend the award against
any prejudice that may be suffered by the party seeking to enforce the ward. Insofar as the
party seeking to set aside or suspend the award is concerned, the courts will need to
consider whether the grounds for the application are reasonable. Such a party may be
required to provide some summary proof of the grounds they rely on. The courts should
require such proof to prevent dilatory tactics by a party merely seeking to delay the
enforcement of an award. (20)
Insofar as the party seeking enforcement is concerned, provided that such a party has
applied for security, the court may consider the extent to which such security may assuage
any prejudice such a party may suffer.
P 296
P 297
[G] Arbitrability
The High Court may not enforce an award under section 39(1)(b)(i), where the subject
matter of the dispute is not capable of settlement by arbitration under the laws of
Malaysia.
This ground for refusing enforcement of an award reflects section 4(1) of the Arbitration Act
2005, which provides that any dispute may be resolved by arbitration unless the
arbitration agreement is contrary to public policy. Reference should be made to §4.01 and
§4.02 supra for a commentary on arbitration agreements that may be contrary to public
policy.
As the arbitrability of a dispute depends on public policy, having section 39(1)(b)(i) as a
separate ground from section 39(1)(b)(ii) appears superfluous. The arbitrability ground in
Article V(2)(a) of the New York Convention is recognized as being superfluous and
maintained as a separate ground for historic reasons. (21)
Section 39(1)(b)(i) expressly provides that the arbitrability of the dispute shall be
determined in accordance with the laws of Malaysia. Nevertheless, in considering the
arbitrability of the dispute, and whether it is contrary to public policy, especially where an
award from a foreign state is concerned, it is submitted that the public policy the courts
should consider is the international rather than the domestic public policy of Malaysia.
This is considered in §39.06 [H] infra.
It is also submitted that the non-arbitrability should not merely be incidental to the
dispute but should at least cover a category of disputes or the whole dispute if
enforcement is to be refused. (22)

[H] Public Policy

The High Court may refuse to enforce an award under section 39(1)(b)(ii) of the Arbitration
Act 2005, where the award is in conflict with public policy. The public policy referred to in
section 39(1)(b)(ii) is expressly stated to be the public policy of Malaysia.
The courts have narrowly construed the term ‘public policy’ as being the most basic
notions of morality. Furthermore, although the public policy is that of Malaysia, a
distinction is drawn between domestic and international public policy. An act that may be
contrary to the laws of Malaysia and accordingly her domestic public policy may not
necessarily be contrary to her international public policy. This is because her international
public policy is concerned with the most basic notions of morality. (23)
P 297 These principles are lucidly expressed by the High Court, in Open Type Joint Stock Company
P 298 Efirnoye (EFKO) v. Alfa Trading Ltd [2012] 1 CLJ 323 at paragraphs 50, 51 and 54:
[50] … In any event applying the test set out in the Ras Al-Khaimah case (above)
it can hardly be said that the enforcement of the Arbitration Award would be
wholly offensive to the ordinary, reasonable and fully informed members of the
public on whose behalf the powers of the state are exercised …
[51] In relation to the law relating to the invoking of the public policy exception,
the decision of the New Zealand Court of Appeal in the case of Reeves v. One
World Challenge LLC [2005] NZCA 314 supports the position that a higher
threshold is required to invoke this exception … The Court of Appeal in New
Zealand rejected this approach and held that the public policy exception was a
narrow one that had necessarily to be confined in line with the comity of

179
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 nations principle. The fact that a case would have been decided differently
under New Zealand law was not sufficient to invoke the exception …
…
[54] I also respectfully adopt the reasoning in the Malaysian High Court case of
Infineon Technologies (M) Sdn Bhd v. Orisoft Technology Sdn Bhd [2010] 1 LNS 889
Mohamad Ariff bin Md Yusoff held, inter alia as follows:
… I now reproduce below some leading views taken on the issue of
public policy in the area of arbitration law. For example in the Hong
Kong Court of Final Appeal decision in Hebei Import & Export Corp v.
Polytek Engineering Co Ltd [1999] 2 HKCFAR 111, Bokhary PJ said: ‘…
there must be compelling reasons before enforcement of the
convention award can be refused on public policy grounds. This is
not to say that the reasons must be so extreme that the award falls
to be cursed by bell book and candle. But the reasons must go
beyond the minimum which would justify setting aside the domestic
judgment award. A point to similar effect was made in a comparable
context by the United States Supreme Court in Mitsubishi Motors
Corp v. Soler Chrysler Plymouth Inc [1985] 473 US 640 … the majority
said this … concerns of international comity, respect for the
capacities of foreign and Transnational Tribunals, and sensitivity to
the needs of the International commercial System for predictability
in the resolution of disputes require that we enforce the parties
agreement even assuming that a contrary result would be
forthcoming in a domestic context …
… Both leading cases in Hong Kong and Singapore relate to the
enforcement of a foreign arbitral award. In both cases, the approach
is not to refuse to register on the ground of conflict of public policy
unless the most basic notions of morality would be offended.
The courts have considered two instances of awards said to be in conflict with the public
policy of Malaysia. In neither instance did the courts accept the challenge.
In Open Type supra at paragraphs 41-43 and 47, the High Court accepted that if a dispute
had been decided in an arbitration, it would be in accordance with the principle of res
judicata and contrary to public policy to allow the same dispute to be determined by a
subsequent arbitration. However, on the facts, the party resisting enforcement of the award
had failed to show that the dispute decided on was the same. To the contrary, the party
seeking enforcement had shown, based on the awards, that different disputes were
determined by the respective awards.
The High Court, in Tanjung Langsat Port Sdn Bhd v. Trafigura Pte Ltd & Another Case [2016] 4
CLJ 927 at paragraphs 78, 87-89, held that the absence of reasons in an award would not
P 298 render the award contrary to public policy, as the rules of natural justice did not require
P 299 that reasons be given. The High Court went on to hold that, in any event, sufficient
reasons had been provided to adequately notify the parties of the basis of the award.
It is submitted that where the arbitration agreement requires that reasons be given in the
award, the absence of such reasons would be in conflict with public policy. The reason for
this, as stated in another context in Tanjung Langsat supra, is that the parties are entitled
to know how the arbitral tribunal has reached its decision. This must, however, be qualified
by the proviso that the parties are free to dispense with such reasons either by express
agreement or as a matter of practice. (24)
P 299

References
1) See Analytical Commentary, Article 35, commentary 1.
2) See Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL
Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010) at para. 8-014.
3) See Analytical Commentary, Article 35, commentary 4.
4) See Uba Urus Bina Asia Sdn Bhd v. Quirk & Associates Sdn Bhd & Anor [2016] 4 CLJ 468 at
para. 37.
5) See Lambard Commodities Ltd v. Alami Vegetable Oil Products Sdn Bhd [2010] 1 CLJ 137
at para. 28, FC, where it was held under the old Arbitration Act 1952, section 27, and the
Convention on Recognition and Enforcement of Foreign Arbitral Awards Act 1985,
section 2(2), that an order in the Gazette was only one means of proving, among others,
that a State was a party to the 1958 New York Convention, and, as such, an order in the
Gazette was not a precondition.
6) See Analytical Commentary, Article 35, commentary 3.
7) See Analytical Commentary, Article 38, commentary 5.
8) See Taman Bandar Baru supra at para. 33(c), HC; Bauer supra at para. 19.

180
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 9) See Albert Jan van den Berg, The New York Convention of 1958 (Kluwer Law 1981) at para.
III – 4.1.1.
10) See Taman Bandar Baru supra at para. 33(a), HC; Tridant Engineering (M) Sdn Bhd v.
Ssangyong Engineering and Construction Co Ltd [2016] 6 MLJ 166 at paras 35 and 36, CA;
Agrovenus supra at para. 30(a).
11) See Albert Jan van den Berg, The New York Arbitration Convention of 1958 supra at para.
III 4.4.
12) See §36.01 to §36.03 supra.
13) See §38.02 supra.
14) See Albert Jan van den Berg, The New York Arbitration Convention of 1958 supra at para.
III – 4.5.2.1.
15) See Albert Jan van den Berg, The New York Arbitration Convention of 1958 supra at para.
III – 4.5.2.2.
16) See Albert Jan van den Berg, The New York Arbitration Convention of 1958 supra at para.
III – 4.5.2.2.
17) See §39.03 supra.
18) See Societe Hilmarton v. Societe Omnium de Traitment et de Valorisation (1994) Rev Arb
327; In the matter of the Arbitration of Certain Controversies Between Chromalloy
Aeroservices and the Arab Republic of Egypt 939 F Supp 907 (DDC 1996).
19) See Albert Jan van den Berg, The New York Arbitration Convention of 1958 supra at para.
III – 4.5.3.2.
20) See Albert Jan van den Berg, The New York Convention of 1958 supra at para. III – 4.5.3.3.
21) See Albert Jan van den Berg, The New York Convention of 1958 supra at para. III – 5.2.
22) See Albert Jan van den Berg, The New York Convention of 1958 supra at para. III – 5.2.
23) See Albert Jan van den Berg, The New York Convention of 1958 supra at para. III – 5.1.
24) See Albert Jan van den Berg, The New York Convention of 1958 supra at para. III – 5.3.3.

181
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 9: Additional Provisions Relating to Arbitration
Publication 40. Consolidation of Proceedings and Concurrent Hearings
Arbitration in Malaysia: A (1) The parties may agree –
Commentary on the
Malaysian Arbitration Act (a) that the arbitration proceedings shall be consolidated with other arbitration
proceedings; or
(b) that concurrent hearings shall be held,
Jurisdiction on such terms as may be agreed.
Malaysia (2) Unless the parties agree to confer such power on the arbitral tribunal, the tribunal has
no power to order consolidation of arbitration proceedings or concurrent hearings.

Bibliographic reference §40.01 INTRODUCTION

'Chapter 9: Additional Section 40 of the Arbitration Act 2005 allows the parties to agree to consolidate arbitration
Provisions Relating to proceedings or to hold concurrent hearings. There is no equivalent to section 40 in the 1985
Arbitration', in Thayananthan Model Law. As section 40 appears in Part III of the Arbitration Act 2005, it will apply in
Baskaran , Arbitration in domestic arbitrations unless the parties have opted out in accordance with section 3(2) of
Malaysia: A Commentary on the Arbitration Act 2005. Section 40 will not apply in international arbitrations unless the
the Malaysian Arbitration parties have opted in under section 3(3) of the Arbitration Act 2005.
Act, (© Kluwer Law P 301
International; Kluwer Law P 302
International 2019) pp. 301 -
356 §40.02 AUTONOMY
Section 40 of the Arbitration Act 2005 expressly provides that the parties must agree
before the proceedings are consolidated or concurrent hearings are held. The Arbitration
Act 2005 emphasizes the need for an agreement in deference to the principle of party
autonomy. To allow the courts or the arbitral tribunal to order a consolidation would be
contrary to the principle of autonomy. To compel consolidation or concurrent hearings may
also lead to a party being in proceedings with a third party they never intended to
arbitrate a dispute with. This may also result in an unexpected loss of confidentiality.
Section 40 of the Arbitration Act 2005, however, does allow the parties to agree on
consolidation or concurrent hearings, as there are advantages to this in certain
circumstances. First, it avoids different findings on the same issues. Second, it may result
in a saving of time and cost. Third, where a transaction involves a chain of contracts, it
allows disputes arising from the same transaction and facts but different contracts to be
resolved together. This can be seen, for example, in the construction industry, where a
single project may result in a main building contract and a series of subcontracts, all of
which involve the same or similar facts.
Parties are able to agree on consolidation expressly, or by incorporating by reference
standard forms of contract or adopting institutional rules. The latter two of these are most
common in practice and are considered below.

[A] PAM Contract 2018

The Malaysian Institute of Architect, or PAM by its Malay acronym, publishes the PAM suite
of contracts for construction projects, which is the de facto standard form of building
contract for the private sector in Malaysia.
The PAM suite of contracts expressly provides for consolidation of arbitration proceedings
arising from the main contract and the nominated subcontract.
Clause 37.5 of both the PAM Contract 2018 (With Quantities) and PAM Contract 2006
(Without Quantities) provides:
Where any dispute arises between the Employer and Contractor and the dispute
relates to the works of a Nominated Sub-Contractor and arises out of or is
connected with the same dispute between the Contractor and such Nominated
Sub-Contractor, the Employer and Contractor shall use their best endeavour to
appoint the same arbitrator to hear the dispute under Clause 31.3 of the PAM
Sub-Contract 2018.
Clause 31.3 of the PAM Sub-Contract 2018 in turn provides:
If any dispute arises in connection with the Main Contract and such dispute
concerns the Sub-Contract Works, the Contractor may by written notice to the
Sub-Contractor require that any such dispute under the Sub-Contract be
referred to the appointed arbitrator under the Main Contract subject to the
agreement of the Employer (such agreement not to be unreasonably withheld)
P 302 and provided always that the arbitrator’s hearing of witnesses has not
P 303 commenced. Where the arbitrator is willing to act and has no conflict of

182
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 interest in so acting, and the Sub-Contractor has no valid grounds why the
arbitrator should not act under the Sub-Contract, such dispute shall be referred
to the same arbitrator. In such event, the arbitrator may consolidate the
proceedings.
There are several conditions to consolidation under the PAM suite of contracts:
(1) a dispute must have arisen between the Employer and the Contractor (the Main
Contract Dispute);
(2) a dispute must have also arisen between the Contractor and the Sub-Contractor (the
Sub-Contract Dispute);
(3) the Main Contract Dispute relates to the Sub-Contract Works;
(4) the Main Contract Dispute arises out of or is related to the Sub-Contract Dispute;
(5) the Contractor requests that the Sub-Contract Dispute be referred to the appointed
arbitrator under the Main Contract;
(6) the Employer agrees to this Contractor’s request, with such agreement not to be
unreasonably withheld;
(7) the Sub-Contractor has no valid grounds for objecting to such an arbitrator acting;
(8) such an arbitrator has not commenced hearing witnesses; and
(9) such an arbitrator is willing to act and has no conflict.

[B] AIAC Arbitration Rules 2018

Rule 10 of the AIAC Arbitration Rules 2018 allows for consolidation and concurrent hearings
on the following terms:
Consolidation of Proceedings and Concurrent Hearings
1. Upon the request of any Party or, if the Director deems it appropriate, the
Director may consolidate two or more arbitrations into one arbitration, if:
(a) the Parties have agreed to consolidation;
(b) all claims in the arbitrations are made under the same arbitration
agreement; or
(c) the claims are made under more than one arbitration agreement,
the dispute arises in connection with the same legal relationships,
and the Director deems the arbitration agreements to be
compatible.
2. In deciding whether to consolidate, the Director shall consult all Parties
and any appointed arbitrators, and shall have regard to any relevant
circumstances including, but not limited to:
(a) the stage of the pending arbitrations and whether any arbitrators
have been nominated or appointed;
(b) any prejudice that may be caused to any of the Parties; and
(c) the efficiency and expeditiousness of the proceedings.
3. When the arbitrations are consolidated, they shall be consolidated into
the arbitration that commenced first, unless otherwise agreed by the
Parties.
4. Within 15 days of being notified of a decision by the Director to
P 303 consolidate two or more arbitrations, all Parties may agree on the
P 304 arbitrators to be appointed, if any, to the consolidated arbitration
and/or the process of such appointment. Failing such agreement, any
party may request the Director to appoint the arbitral tribunal, in which
case, the Director may release any arbitrators appointed prior to the
consolidation decision. In these circumstances, all Parties shall be
deemed to have waived their right to nominate an arbitrator.
5. The parties irrevocably waive their rights to any form of appeal, review or
recourse to any court or other judicial authority, on the basis of any
decision to consolidate or not to consolidate arbitrations, to the validity
and/or enforcement of any award made by the arbitral tribunal, insofar as
such waiver can validly be made.
Rule 10(1) allows for consolidation both at a party’s request and at the Director’s own
initiative. Consolidation may be ordered in three circumstances as outlined in Rule 10(1)
above. The first two circumstances are to be expected, as consolidation is likely where the
parties have agreed to this, like in the case of the PAM Contract 2018, or where the claims
all arise out of the same arbitration agreement. The third circumstance is the most likely
to arise in practice and be contentious. This is a situation where claims arise out of
different arbitration agreements, but the disputes arise out of the same legal
relationships. It is unclear whether the words ‘same legal relationships’ is broad enough to
capture a situation where disputes have arisen between different parties in the same
chain of contracts, like disputes between an employer and a contractor on the one hand
and between a contractor and a subcontractor on the other. It is submitted that Rule 10

183
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 should be given a broad purposive interpretation that allows for this.
Rule 10(2) sets out the factors to be considered when considering an application to
consolidate. Clearly an application is more likely to be allowed if it is made at the initial
stages of the proceedings, preferably even before the arbitral tribunal is constituted. Apart
from this, the paramount consideration is likely to be whether time and cost will be saved
and, in this regard, whether there are common questions of fact or of law that are of
sufficient importance in proportion to the rest.
Rule 10(4) allows the parties fifteen days to agree on the arbitral tribunal once an order for
consolidation is made, failing which the Director may constitute the arbitral tribunal.
P 304
P 305

41. Determination of Preliminary Point of Law by Court

(1) Any party may apply to the High Court to determine any question of law arising in the
course of the arbitration –
(a) with the consent of the arbitral tribunal; or
(b) with the consent of every other party.
(2) The High Court shall not consider an application under subsection (1) unless it is
satisfied that the determination –
(a) is likely to produce substantial savings in costs; and
(b) substantially affects the rights of one or more of the parties.
(3) The application shall identify the question of law to be determined and, except where
made with the agreement of all parties to the proceedings, shall state the grounds that
support the application.
(4) While an application under subsection (1) is pending, the arbitral proceedings may be
continued and an award may be made.

§41.01 INTRODUCTION
Section 41 of the Arbitration Act 2005 allows for the determination of a preliminary point of
law that arises in the course of the arbitration proceedings by the High Court.
There is no equivalent provision to section 41 in 1985 Model Law. Section 41 is based on
clause 4 of Schedule 2 of the New Zealand Arbitration Act 1996, which provides:
4. Determination of preliminary point of law by court
(1) Notwithstanding anything in article 5 of Schedule 1, on an application to
the High Court by any party –
(a) with the consent of the arbitral tribunal; or
(b) with the consent of every other party,
the High Court shall have jurisdiction to determine any question of
law arising in the course of the arbitration.
(2) The High Court shall not entertain an application under subclause (1)(a)
with respect to any question of law unless it is satisfied that the
determination of the question of law concerned –
(a) might produce substantial savings in costs to the parties; and
(b) might, having regard to all the circumstances, substantially affect
the rights of 1 or more of the parties.
(3) With the leave of the High Court, any party may, within 1 month from the
date of any determination of the High Court, under this clause or within
such further time as that court may allow, appeal from that determination
to the Court of Appeal.
(4) If the High Court refuses to grant leave to appeal under subclause (3), the
Court of Appeal may grant special leave to appeal.

P 305 The significant differences between the Malaysian and the New Zealand provision are that:
P 306
(1) section 41 applies the criteria in section 41(2) whether consent has been given by the
arbitral tribunal or the other party, while clause 4 only applies these criteria where
the arbitral tribunal has consented; and
(2) section 41 does not provide for leave to appeal from the decision of the High Court
unlike clause 4(3). The decision of the High Court under section 41 may be appealed
as of right to the Court of Appeal.
As section 41 appears in Part III of the Arbitration Act 2005, it will apply in domestic
arbitrations unless the parties have opted out in accordance with section 3(2). Section 41
will not apply to international arbitrations unless the parties have opted in under section
3(3). For domestic and international arbitration with a seat in Malaysia, where the parties
have agreed to adopt the AIAC Arbitration Rules 2018, section 41 will not apply in

184
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 accordance with Rule 1(c).

§41.02 QUESTION OF LAW

Section 41(1) of the Arbitration Act 2005 allows for a party to apply to the High Court to
determine a question of law. The question must be a pure question of law and not involve
any dispute of fact. Where there is a dispute of fact, that dispute will have to be resolved
by the arbitral tribunal and not the High Court. This was emphasized by the Court of
Appeal, in Bauer (M) Sdn Bhd v. Kukdong Engineering & Construction Co Ltd [2016] MLJU 1779
at paragraphs 21 and 22:
[21] This was a case where the jurisdiction of the High Court could not be waived
by the parties including the arbitrator. The High Court’s jurisdiction under
section 41 of the Arbitration Act is derived only when the question framed
related to a pure question of law.
[22] In this case, a dispute of fact as to whether there was a waiver of rights in
the arbitration proceeding by the Appellant had to be resolved first by the
arbitrator who is the trier of facts before the questions framed could be asked
and answered … .

§41.03 CONSENT
Section 41(1) of the Arbitration Act 2005 requires the consent of the arbitral tribunal or the
other party before a party may apply to the High Court to determine a question of law
arising in the course of the arbitration. In the absence of consent, the arbitral tribunal
would need to determine the question itself. Section 41 does not allow for the arbitral
tribunal by its own motion to refer a question to be determined by the High Court.
P 306
P 307

§41.04 COURSE OF THE ARBITRATION

Section 41(1) refers to a question that arises ‘in the course of the arbitration’. This is to be
contrasted with section 42(1) of the Arbitration Act 2005 which provides for a question
‘arising out of an award’.
This distinction between a question arising out of the course of the arbitration and the
award, with section 41 applying to the former, and section 42 to the latter, was recognized
by the High Court, in MMC Engineering Group Bhd & Anor v. Wayss Freytag Malaysia Sdn Bhd
[2015] 10 MLJ 689 at paragraph 31, where it was, inter alia, held:
Hence, the questions before the Court now must necessarily be questions of law
which emanate from the award and not, from the arbitration or the arbitral
proceedings. For that, the jurisdiction is to be found under section 41 of the
Arbitration Act 2005 which allows the Courts to examine matters arising during
the arbitral proceedings.
Although section 41(1) refers to the ‘course of the arbitration’ it does not require the
application to be made at the initial stages of the arbitration. However, an application
made at a later stage may not satisfy the criteria in section 41(2), as it is less likely to
produce substantial savings in costs.

§41.05 CRITERIA
Section 41(2) of the Arbitration Act 2005 provides for the criteria to be applied by the High
Court once the requisite consent under section 41(1) has been obtained. The two criteria
are that there must be substantial savings in costs and that the rights of the parties are
substantially affected. Both criteria must be satisfied. In practice, the two criteria are
likely to be entwined. For example, if the question is one of limitation, its early
determination by the courts would both save costs and affect the rights of the parties.
Given these two criteria, especially the first one, an application should be made at the
initial stages of the arbitration.

§41.06 FORMAL REQUIREMENTS

Section 41(3) of the Arbitration Act 2005 requires the question of law to be identified in the
application together with the grounds unless the application is made with the consent of
all parties. These requirements are likely to be construed strictly, in the light of the
authorities on the former section 42(2) of the Arbitration Act 2005, which was similarly
worded and is considered in §42.02 infra.

§41.07 ARBITRATION MAY PROCEED

Section 41(4) of the Arbitration Act 2005 provides that the arbitration may proceed and an
P 307 award made while the application is pending. This is in accordance with the general
P 308 principle of minimal interference. However, where the application has been made with
the consent of the arbitral tribunal and substantially affects the rights of the parties, the

185
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitral tribunal is unlikely to proceed until the question is finally disposed of by the
courts.
P 308
P 309

41A. Disclosure of Information Relating to Arbitral Proceedings and

Awards Prohibited
(1) Unless otherwise agreed by the parties, no party may publish, disclose or communicate
any information relating to –
(a) the arbitral proceedings under the arbitration agreement; or
(b) an award made in those arbitral proceedings.
(2) Nothing in subsection (1) shall prevent the publication, disclosure or communication of
information referred to in that subsection by a party –
(a) if the publication, disclosure or communication is made –
(i) to protect or pursue a legal right or interest of the party; or
(ii) to enforce or challenge the award referred to in that subsection,
in legal proceedings before a court or other judicial authority in or outside
Malaysia;
(b) if the publication, disclosure or communication is made to any government body,
regulatory body, court or tribunal and the party is obliged by law to make the
publication, disclosure or communication; or
(c) if the publication, disclosure or communication is made to a professional or any
other adviser of any of the parties.

§41A.01 Introduction
Section 41A of the Arbitration Act 2005 provides for the confidentiality of arbitral
proceedings and awards, as well as, the exceptions to such confidentiality.
Section 41A was introduced by the Arbitration (Amendment) (No 2) Act 2018. Section 41A is
based on section 18 of the Hong Kong Arbitration Ordinance, with which it is essentially
identical.
Prior to the amendments in 2018, the Arbitration Act 2005 did not expressly provide for the
confidentiality of arbitral proceedings and awards. This is because the Arbitration Act 2005
is based on the 1985 Model Law, which does not expressly provide for confidentiality. The
absence of provisions in the 1985 Model Law on confidentiality was recognized by the
Federal Court, in Far East Holdings Berhad & Ors v. Majlis Ugama Islam dan Adat Resam
Melayu Pahang [2017] 8 AMR 313 at paragraph 114.
As section 41A appears in Part III of the Arbitration Act 2005, it will apply in domestic
arbitrations unless the parties have opted out in accordance with section 3(2) of the
Arbitration Act 2005. Section 41A will not apply in international arbitrations unless the
parties have opted in in accordance with section 3(3) of the Arbitration Act 2005.

§41A.02 The Need for an Express Provision on Confidentiality

P 309 In Malaysia, the courts have always regarded arbitrations as being private and
P 310 confidential. The courts have recognized that confidentiality is one of the advantages of
arbitration, which is why parties opt for such proceedings rather than proceedings in court.
The courts regard confidentiality as being inherent in arbitration. So, in the absence of an
express term in the arbitration agreement as to the confidentiality of the arbitral
proceedings, the courts will imply such a term.
In this context, the High Court, in Malaysian Newsprint Industries Sdn Bhd v. Bechtel
International, Inc & Anor [2008] 5 MLJ 254 at page 278, held:
The advantages of arbitration can never be listed with exactitude. Privacy of the
hearing and confidentiality are two major benefits of arbitration.
Coleman J in Hassneh Insurance Co of Israel & Ors v Steuart J Mew [1993] 2 Lloyd’s
Rep 243 at p 247 aptly said in regard to privacy:
If the parties to an English law contract refer their disputes to
arbitration they are entitled to assume at the least that the hearing
will be conducted in private. The assumption arises from a practice
which has been universal in London for hundreds of years and, I
believe, undisputed. It is a practice which represents an important
advantage of arbitration over the courts as a means of dispute
resolution. The informality attaching to a hearing held in private and
the candour to which it may give rise is an essential ingredient of
arbitration … .
On confidentiality, I need to refer to the case of Dolling-Baker v Merrett Ors

186
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [1991] 2 All ER 890; [1990] 1 WLR 1205 (CA) at p 1213 which held that in the
absence of an express term in an arbitration clause providing for
confidentiality, then the presumption of confidentiality arises as an implied
term by the very nature of the arbitral process itself.
It is now accepted, by all and sundry, that arbitrations are private and
confidential … It is inconceivable that with all these endearing points, the
plaintiff will not want to have access to arbitration.
Although the confidentiality of arbitration is settled in Malaysia, concern arose in the
Commonwealth as a result of the judgment of the High Court of Australia, in Esso Australia
Resources Ltd v. The Honourable Sidney James Plowman (the Minister for Energy and
Minerals) (1995) 128 ALR 391. The High Court of Australia, in Esso Australia supra, decided
that arbitral proceedings are private, in the sense that such proceedings are not open to
the public. However, documents or information produced in arbitral proceedings is not
clothed with confidentiality, in the absence of an express term in the arbitration
agreement.
The judgment of the High Court of Australia, in Esso Petroleum supra, which is contrary to
the settled position in the Commonwealth gave rise to concern, which resulted in various
countries (1) enacting legislation to expressly provide for the confidentiality of arbitration
proceedings. Malaysia is the most recent country to adopt such statutory provisions by way
of section 41A of the Arbitration Act 2005, which is identical to section 18 of the Hong Kong
Arbitration Ordinance.
P 310
P 311

§41A.03 The Confidentiality of Arbitral Proceedings and the Award

Section 41A(1) of the Arbitration Act 2005 provides that no party shall disclose any
information relating to the arbitral proceedings or the award unless otherwise agreed by
the parties.
Section 41A(1) of the Arbitration Act 2005 provides for confidentiality as a matter of statute
and not by way of implying a term into the arbitration agreement. This is unlike section
14B(1) of the New Zealand Arbitration Act 1996, which implies an obligation of
confidentiality in the arbitration agreement.
Section 41A(1) preserves party autonomy by allowing the parties to agree on the degree of
confidentiality applicable to the arbitration. The parties are free to agree on a higher
degree of confidentiality than that provided for in section 41A(1) or that the arbitral
proceedings and the award will not be confidential.
A ‘party’ is bound by an obligation of confidentiality under section 41A(1). The word ‘party’
is defined in section 2 of the Arbitration Act 2005 as a party to the arbitration agreement,
or the parties to the arbitration in the case of a multiparty arbitration agreement.
This definition has been interpreted widely by the High Court, in Sundra Rajoo v. Mohamed
Abd Majed & Anor [2011] 6 CLJ 923 at paragraph 10(f), to include the arbitral tribunal on the
basis that the arbitration agreement is trilateral. Based on this judgment, the obligation of
confidentiality would extend to the arbitral tribunal. It is submitted that, for the
avoidance of doubt, the obligation of confidentiality in section 41A(1) should expressly
apply to the arbitral tribunal, as does section 14B(1) of the New Zealand Arbitration Act
1996.

§41A.04 The Three Exceptions to Confidentiality

Section 41A(2) of the Arbitration Act 2005 provides for the three exceptions to the
confidentiality of arbitration. The three exceptions are where disclosure is to:
(1) protect a legal right, or enforce or challenge the award;
(2) the authorities; and
(3) an adviser.
We consider each of these three exceptions below.

[A] Legal Right or Interest and Enforce or Challenge the Award

Section 41A(2)(a)(i) allows a party to disclose information relating to the arbitral
proceedings or the award to protect or pursue a legal right or interest of the party. A party
may need to disclose such information to pursue a claim against a third party or defend a
claim by a third party.
P 311 For example, an insured party may use an award against them to pursue a claim for an
P 312 indemnity against their insurers. Another example, in multi-tier commercial
arrangements in the construction industry, would be where a main contractor uses an
award made against them in favour of a subcontractor to pursue a claim against the
employer.
In these examples, disclosure is necessary for a party to pursue their claims, as unlike civil
proceedings, arbitral proceedings cannot be consolidated without the consent of all

187
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 parties. Therefore, a party needs to disclose information from an arbitration in subsequent
unconsolidated proceedings to pursue their claims.
Section 41A(2)(a)(ii) allows a party to disclose information relating to the arbitral
proceedings or the award to enforce or challenge such award. This exception is obvious, as
a party would need to disclose such information in enforcement or setting aside
proceedings.
However, a party may need to make applications to the High Court under the Arbitration
Act 2005, which also require the disclosure of such information, but do not relate to the
enforcement or challenge of the award. (2) These applications are not expressly covered by
section 41A(2)(a)(ii), which is limited to applications to enforce or challenge the award. It is
submitted that a party is entitled to disclose information relating to the arbitral
proceedings or the award in other applications to the High Court under the Arbitration Act
2005 based on the broader exception in section 41A(2)(i) to protect or pursue a right or
legal interest. For the avoidance of doubt, perhaps section 41A(2)(ii) should expressly allow
for disclosure in relation to all applications to court under the Arbitration Act 2005, like
section 14C(b)(i)(C) of the New Zealand Arbitration Act 1996.

[B] The Authorities

Section 41A(2)(b) allows a party to disclose information relating to the arbitral proceedings
or the award if such disclosure is made to any governmental body, regulatory body, court
or tribunal and such party is obliged by law to make such disclosure.
For disclosure to be permitted under section 41A(2)(b) two conditions must be fulfilled:
(1) the party must disclose to the authorities; and
(2) the party must be ‘obliged by law’ to make such disclosure.

[C] The Adviser

P 312 Section 41A(2)(c) allows a party to disclose information relating to the arbitral proceedings
P 313 or the award to professional or any other adviser of the parties. This exception is
regarded as being obvious. (3) The exception is not limited to advisers involved in the
arbitral proceedings.
P 313
P 314

41B. Proceedings to Be Heard Otherwise Than in Open Court

(1) Subject to subsection (2), court proceedings under this Act are to be heard otherwise
than in an open court.
(2) Notwithstanding subsection (1), the court may order the proceedings to be heard in an
open court –
(a) on the application of any party; or
(b) if, in any particular case, the court is satisfied that those proceedings ought to be
heard in an open court.
(3) An order of the court under subsection (2) is final.

§41B.01 Introduction
Section 41B of the Arbitration Act 2005 provides for the privacy of court proceedings under
the Arbitration Act 2005 and exceptions to such privacy.
Section 41B was introduced by the Arbitration (Amendment) (No 2) Act 2018. Section 41A is
based on section 16 of the Hong Kong Arbitration Ordinance, with which it is essentially
identical, save that:
(1) section 41B(2) of the Arbitration Act 2005 begins with the words ‘Notwithstanding
subsection (1)’, which are not found in section 16(2) of the Hong Kong Arbitration
Ordinance; and
(2) section 41B(3) of the Arbitration Act 2005 uses the word ‘final’ instead of the words
‘not subject to appeal’ found in section 16(3) of the Hong Kong Arbitration Ordinance.
The changes made between section 16 of the Hong Kong Arbitration Ordinance and section
41B of the Arbitration Act 2005 do not have any material significance.
Prior to the amendments in 2018, the Arbitration Act 2005 did not expressly provide for the
privacy of court proceedings arising thereunder. This is because the Arbitration Act 2005 is
based on the 1985 Model Law, which does not expressly provide for the privacy of such
court proceedings.
As section 41B appears in Part III of the Arbitration Act 2005, it will apply in domestic
arbitrations unless the parties have opted out in accordance with section 3(2) of the
Arbitration Act 2005. Section 41A will not apply in international arbitrations unless the
parties have opted in in accordance with section 3(3) of the Arbitration Act 2005.

§41B.02 Enhancement of Existing Provisions on Privacy of Court

188
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Proceedings
Prior to the amendments in 2018, section 50 of the Arbitration Act 2005 provided, and still
provides, that all applications to the High Court under the Arbitration Act 2005 shall be by
P 314 way of originating summons. All originating summonses are to be heard in chambers. (4)
P 315 To that extent, prior to the amendments in 2018, applications under the Arbitration Act
2005 were not heard in open court but in chambers. Section 41B has reinforced the existing
provisions on applications under the Arbitration Act 2005 not being heard in open court.

§41B.03 The Privacy of Court Proceedings under the Arbitration Act 2005
Section 41B(1) provides that court proceedings under the Arbitration Act 2005 will be heard
otherwise than in an open court. In practice, this means that such proceedings will be
heard in chambers and to that extent will be private.
Section 41B does not provide for any judgment made pursuant to an application under the
Arbitration Act 2005 to be anonymized or for the prohibition of access to the files in the
registry of the court. (5) In the absence of such provisions, the privacy allowed by section
41B is of a limited nature.

§41B.04 Order for Open Court Proceedings

Section 41B(2) allows the courts to order that proceedings under the Arbitration Act 2005
be in open court upon the application of a party, or by the court’s own motion.
Section 41B(2) does not provide for the factors to be considered by the courts in allowing
open court proceedings. It is submitted that the following factors would be relevant: (6)
(1) the open justice principle, meaning that proceedings in court are generally meant to
be open unless there are exceptional circumstances against this;
(2) the privacy and confidentiality of arbitral proceedings;
(3) any other public interest considerations;
(4) the terms of the arbitration agreement; and
(5) the nature of the application under the Arbitration Act 2005.
Section 41B(3) provides that any such order by the court shall be final. This is similar to
other provisions in the Arbitration Act 2005, which provide for the finality of the order of
the Court of First Instance, to avoid unnecessary time and cost being incurred on appeals
in matters that are essentially procedural. Apart from this, the finality of such order is also
practical, as any appeal is likely to be academic, if an order has been made allowing for
open court proceedings.
P 315
P 316

42. Reference on Questions of Law

[deleted by section 12 of the Arbitration (Amendment) (No 2) Act 2018]

§42.01 INTRODUCTION
Section 42 of the Arbitration Act 2005 was deleted by section 12 of the Arbitration
(Amendment) (No 2) Act 2018. Section 42, prior to its deletion, provided that:
(1) Any party may refer to the High Court any question of law arising out of an
award.
(1A) The High Court shall dismiss a reference made under subsection (1) unless
the question of law substantially affects the rights of one or more of the
parties.
(2) A reference shall be filed within forty-two days of the publication and
receipt of the award, and shall identify the question of law to be
determined and state the grounds on which the reference is sought.
(3) The High Court may order the arbitral tribunal to state the reasons for its
award where the award –
(a) does not contain the arbitral tribunal’s reasons; or
(b) does not set out the arbitral tribunal’s reasons in sufficient detail.
(4) The High Court may, on the determination of a reference –
(a) confirm the award;
(b) vary the award;
(c) remit the award in whole or in part, together with the High Court’s
determination on the question of law to the arbitral tribunal for
reconsideration; or
(d) set aside the award, in whole or in part.
(5) Where the award is varied by the High Court, the variation shall have
effect as part of the arbitral tribunal’s award.

189
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (6) Where the award is remitted in whole or in part for reconsideration, the
arbitral tribunal shall make a fresh award in respect of the matters
remitted within ninety days of the date of the order for remission or such
other period as the High Court may direct.
(7) Where the High Court makes an order under subsection (3), it may make
such further order as it thinks fit with respect to any additional costs of the
arbitration resulting from that order.
(8) On a reference under subsection (1) the High Court may –
(a) order the applicant to provide security for costs; or
(b) order that any money payable under the award shall be brought into
the High Court or otherwise secured pending the determination of
the reference.
Section 42 of the Arbitration Act 2005 allowed a party to refer a question of law arising out
of the award to the High Court. The High Court was entitled to then confirm, vary, set aside
or remit the award.
Section 42 appeared in Part III of the Arbitration Act 2005. Section 42 in accordance with
section 3(2)(b) applied in domestic arbitrations unless the parties had opted out. In this
P 316 context, Rule 1(c) of the AIAC Arbitration Rules 2018 provides that where the seat of
P 317 arbitration is Malaysia, section 42 will not apply. Section 42 in accordance with section
3(3)(b) did not apply to international arbitrations unless the parties had opted in.
This distinction had been recognized by the High Court, in Exceljade Sdn Bhd v. Bauer (M)
Sdn Bhd [2013] MLJU 1202 at paragraph 5:
The Arbitration Act 2005 is modelled on UNCITRAL Model Law (‘Model Law’).
However section 42 is one of the few sections that has no parallel in the Model
Law. As such no recourse may be made to the Model Law to ascertain or
construe this section. Section 42 falls within Part III of the Act. Part III, including
section 42, applies automatically to domestic arbitrations unless parties ‘opt
out’. International arbitrations do not fall within the scope of Part III, and
thereby section 42, unless the parties specifically choose to ‘opt in’.
Similarly, the High Court, in MMC Engineering Group Bhd & Anor v. Wayss Freytag Malaysia
Sdn Bhd [2015] 10 MLJ 689 at paragraph 16, inter alia, held:
Section 42 of the Arbitration Act 2005 is peculiar to the Malaysian arbitration
scene. This recourse to the Courts is available in all domestic arbitrations
unless the parties have specifically opted out of its operation; and unavailable
to international arbitrations unless the parties have specifically opted in to its
application. This is clear from the provisions of section 42 was amended in 2011
to introduce subsection 42(1A).
The Federal Court, in Tan Sri Dato’ Seri Vincent Tan Chee Yioun & Anor v. Jan De Nul (M) Sdn
Bhd & Anor and another appeal [2018] MLJU 1545 at paragraphs 50-52, confirmed that
section 42 did not apply to an international arbitration, as section 42 was in Part III of the
Arbitration Act 2005, which section 3(3) provided would not apply to an international
arbitration unless the parties agreed otherwise. The Federal Court also emphasized that
the agreement between the parties that the laws of Malaysia applied to the contract did
not mean that section 42 applied to an international arbitration.
Section 42 of the Arbitration Act 2005 had no equivalent in the 1985 Model Law. Section 42
also had no equivalent in arbitration legislation in other Commonwealth jurisdictions,
which generally provide for an appeal on a question of law rather than a reference. These
Commonwealth jurisdictions also provide for a leave to be granted by the courts before
such an appeal can be made. The Federal Court, in Far East Holdings Bhd & Anor v. Majlis
Ugama Islam dan Adat Resam Melayu Pahang and other appeals [2018] 1 MLJ 1 at paragraph
123, emphasized that in Malaysia, unlike elsewhere in the Commonwealth, leave was not
required.
The purpose of section 42 of the Arbitration Act 2005 was to allow the courts to re-examine
questions of law arising out of the award. This was intended, in domestic arbitrations, to
strike a balance between the complete non-interference of the courts and the courts
exercising supervisory jurisdiction over the arbitral proceedings. Any risk of excessive
intervention by the courts was to be limited by the threshold requirements in sections
42(1), (1A) and (2).
P 317 In this context, section 42(1A) was introduced by the Arbitration (Amendment) Act 2011. This
P 318 provision was intended to serve as an additional threshold requirement or filter
mechanism that prevented questions of law being referred to the courts unless they
substantially affect the rights of a party.
These principles were recognized by the Court of Appeal, in Chain Cycle Sdn Bhd v. Kerajaan
Malaysia [2016] 1 CLJ 218 at paragraphs 65 and 66:
[65] The Arbitration Act 2005 did not provide for such a filter mechanism. We
now however have s. 42(1A) of the Arbitration Act 2005 which gives the power to

190
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 the courts to dismiss a reference unless the ‘question of law’ posed ‘…
substantially affects the rights or one of the parties’. The scope of this provision
has still to be tested but it might well allow a party opposing a reference
application to seek to have, if not the whole proceedings, then at least some of
the questions raised to be struck out at the preliminary stages of the
proceedings itself, on that ground.
[66] The pressure was definitely on the courts therefore to be ever vigilant and
to resist attempts to engage the courts in a review of the arbitral award on its
merits, akin to an ‘appeal’, often camouflaged masterly as ‘questions of law’.
There was no room for any dispute that the curial function of the court under s.
42 of the Arbitration Act 2005 was only intended by the legislature to be
extended to questions of law per se, that too, which would affect substantially
the rights of one or the other party.
Subsequently, the Court of Appeal, in Petronas Penapisan (Melaka) Sdn Bhd v. Ahmani Sdn
Bhd [2016] 3 CLJ 403 at paragraph 38, inter alia, held:
We agree with the approach of the learned judge that the court must intervene
where the award is manifestly unlawful and unconscionable. Section 42 has no
equivalent in the Model Law or in parallel jurisdictions. Section 42 is not a
provision as to appeals but a reference on a question of law. There has been a
line of authorities with regards to the limiting of juridical intervention in
arbitration awards and we set out the following decisions on the point ie
intervention should only be exercised in clear and exceptional circumstances
(see Chain Cycle Sdn Bhd v. Kerajaan Malaysia [2016] 1 CLJ 218; [2015] AMEJ 1479.
We are of the opinion that with the pre-requirements of s. 42, it followed there
would be no danger of ‘opening the floodgates’ in respect of review of arbitral
awards.
However, it was perceived that the judgment of the Federal Court, in Far East Holdings
supra, shifted the balance in favour of intervention by the courts. This was because the
judgment allowed for the courts to intervene whenever there was a question of law, which
term was construed broadly. Furthermore, this judgment dispensed with the traditional
safeguards, whereby the courts would only intervene in clear and exceptional cases, or
where the award was manifestly unlawful, unconscionable or perverse. In response to this
perceived shift in balance, section 42 was deleted by the Arbitration (Amendment) (No 2)
Act 2018. The provisions of the deleted section 42 are considered below, as a matter of
academic interest.

§42.02 THRESHOLD REQUIREMENTS

The threshold requirements for a reference on questions of law were set out in sections
42(1), (1A) and (2) of the Arbitration Act 2005.
P 318
P 319
In addition to the threshold requirements in the Arbitration Act 2005, there are certain
threshold requirements set out in the Rules of Court 2012, which are more procedural in
nature.
Order 69 Rule 6 of the Rules of Court 2012 provides:
6. Application to refer questions of law arising out of an award (O. 69 r. 6)
(1) A reference of any question of law to the Court under section 42 of the 2005
Act may be made at any time within forty-two days of the publication and
receipt of the award.
(2) In every application for reference of a question of law under section 42 of
the 2005 Act the originating summons shall, in addition to the matters
stated in rule 4(1) –
(a) identify the question of law arising out of the award which is sought
to be determined;
(b) state the grounds on which reference is sought; and
(c) give particulars of each ground on which it is contended that the
arbitral tribunal erred in law, with references to the paragraphs or
passages of the award where each alleged error is to be found.
(3) The applicant shall file by affidavit, written evidence on which he intends
to rely when he files his originating summons, including a copy of the
arbitration agreement and the award.
(4) The originating summons and affidavit shall be served on each arbitrator
and the respondents.
Based on sections 42(1), (1A) and (2) of the Arbitration Act 2005 and Order 69 Rule 6 of the
Rules of Court 2012, there were eight threshold requirements for a reference on a question
of law:

191
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (1) there must be question of law; (7)
(2) the question of law must arise out of the award; (8)
(3) the question of law must substantially affect the right of the parties; (9)
(4) the reference must be filed forty-two days after the publication and receipt of the
award; (10)
(5) the reference must identify the question of law to be determined; (11)
(6) the reference must state the grounds on which the reference is sought; (12)
(7) the reference must state the particulars of each ground on which the arbitral tribunal
is said to have erred in law together with a reference to the award where such errors
occurred; (13) and
(8) the reference must be served on the other party and the arbitral tribunal. (14)
P 319
P 320
These requirements were listed out and considered by the High Court, in Zenbay Sdn Bhd v.
Yong Choo Kui Shipyard Sdn Bhd [2015] 10 CLJ 924 at paragraphs 47-49. The High Court
identified potentially nine or ten requirements in Zenbay supra. This has been narrowed
down to eight or nine, as the requirements of section 42(2) of the Arbitration Act 2005 and
Order 69 Rule 6(2)(a) appear to be substantially the same. These requirements are now
considered below.

[A] Question of Law

The most significant of the threshold requirements is the requirement that there is a
‘question of law’. A ‘question of law’ is not defined in the Arbitration Act 2005. This is unlike
the New Zealand Arbitration Act 1995, where a ‘question of law’ is defined in Schedule 2,
section 5(10) as follows:
For the purposes of this clause, question of law –
(a) includes an error of law that involves an incorrect interpretation of the
applicable law (whether or not the error appears on the record of the
decision); but
(b) does not include any question as to whether –
(i) the award or any part of the award was supported by any evidence or
any sufficient or substantial evidence; and
(ii) the arbitral tribunal drew the correct factual inferences from the
relevant primary facts.
The courts have considered the meaning of the words ‘question of law’ in several
judgments. Two main approaches have emerged. The first, based on judgments from
England, divides the reasoning process of an arbitral tribunal into these sequential stages:
(1) the arbitral tribunal ascertains the facts. Here, the arbitral tribunal determines facts
that are in dispute;
(2) next, the arbitral tribunal ascertain the law. Here, the arbitral tribunal identifies:
(a) the applicable rules of statute and common law;
(b) the relevant parts of the contract and interprets these parts; and
(c) facts that must be taken into account when a decision is made; and
(3) finally, the arbitral tribunal makes a decision in the light of the facts and the law so
ascertained.
Stage (1) cannot give rise to a question of law. Stage (2) above will give rise to a proper
question of law for determination under section 42 of the Arbitration Act 2005. Stage (3) will
only give rise to a proper question of law where the decision made by the arbitral tribunal
P 320 could not have been reached by applying the correct rules of law. These views were lucidly
P 321 expressed by the High Court, in Exceljade Sdn Bhd v. Bauer (M) Sdn Bhd [2013] MLJU 1202
at paragraphs 17 and 40. These views were subsequently affirmed by the Court of Appeal, in
Kerajaan Malaysia v. Perwira Bintang Holdings Sdn Bhd [2015] 1 CLJ 617 at paragraphs 58-60.
The second approach is based on the definition of a ‘question of law’ in the New Zealand
Arbitration Act 1996 and judgments from Singapore. A question of law arises here where
there is a point of law in controversy that requires the determination of the courts. This
would include the incorrect interpretation of the applicable law. However, questions of
evidence and facts would be excluded. This approach has been developed over a series of
judgments in the High Court, starting with Magna Prima Construction Sdn Bhd v. Bina BMK
Sdn Bhd and another case [2015] MLJU 291 at paragraphs 55-57 and continuing in MMC
Engineering Group Bhd & Anor v. Wayss Freytag Malaysia Sdn Bhd [2015] MLJU 285 at
paragraph 27.
The Federal Court, in Far East Holdings supra, confirmed that the first approach was to be
preferred to the second approach. The second approach was regarded as being too wide.
The Federal Court also provided a non-exhaustive list of what would amount to a question
of law. In this context, the Federal Court, in Far East Holdings supra at paragraphs 150 and
152, held:

192
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [150] ‘The question of law must be one of law and not fact’ (The Arbitration Act
2005 at p 198). ‘An error of fact alone is insufficient’ (Department of Education v.
Azmitia [2015] WASCA 246 per Mazza JA). But there is no universal definition of
‘question of law’. Nonetheless, from our survey of the authorities, we would
conclude that one of the following, which is not an exhaustive list, would meet
the paradigm of ‘any question of law’ in s 42:
(a) a question of law in relation to matters falling within (2) of Mustill J’s three-
stage test;
(b) a question as to whether the decision of the tribunal was wrong (The
Chrysalis);
(c) a question as to whether there was an error of law, and not an error of fact
(Micoperi): error of law in the sense of an erroneous application of law;
(d) a question as to whether the correct application of the law inevitably
leads to one answer and the tribunal has given another (MRI Trading);
(e) a question as to the correctness of the law applied;
(f) a question as to the correctness of the tests applied (Canada v Southam);
(g) a question concerning the legal effect to be given to an undisputed set of
facts (Carrier Lumber);
(h) a question as to whether the tribunal has jurisdiction to determine a
particular matter (Premiums Brands): this may also come under s 37 of the
AA 2005; and
(i) a question of construction of a document (Intelek).
…
[152] Section 42 allows any question of law arising from the award. ‘Any question
of law’ is wider than ‘a question of law’. Since so, it would seem that s 42
contemplates a less narrow interpretation of ‘question of law’. Unless opted in, s
42 only applies to domestic arbitration. A less narrow interpretation of
‘question of law’ in s 42, as we might have given it, would not widen court
intervention in international arbitration. But ‘a point of law in controversy which
has to be resolved after opposing views and arguments have been considered’
is not a ‘question of law’ within the meaning of s 42. There would surely be ‘a
P 321 point of law in controversy’ in every case. If ‘a point of law in controversy’
P 322
were a question of law, then there would be a ‘question of law’ arising in every
award. And that, with respect, could not be right.
The principles set out above have been applied in practice many times. These practical
applications offer some guidance as to what may and may not be considered questions of
law and are explored below in categories.
[1] Facts and Evidence
The courts will not allow a reference on a question of fact under section 42 of the
Arbitration Act 2005. The courts will resist any attempt to circumvent this rule by
contentions that:
(1) an obvious mistake of fact made by the arbitral tribunal in an award amounts to
misconduct;
(2) an obvious mistake of fact made by the arbitral tribunal in an award amounts to the
arbitral tribunal acting in excess of jurisdiction;
(3) an absence of any or sufficient evidence for a finding of fact by the arbitral tribunal
in the award is a question of law that allows for the court to intervene;
(4) inconsistencies in the findings of fact by the arbitral tribunal in the award;
(5) an error by the arbitral tribunal in drawing wrong inferences of fact from the evidence
before them; and
(6) a misapprehension or misunderstanding of the evidence by the arbitral tribunal.
The courts have rejected all of these contentions. The courts have emphasized that most of
these contentions attempt to transform questions of fact into questions of law. These
principles are set out in the judgment of the High Court, in Exceljade supra at paragraphs
35-38 and 45-48.
The High Court, in Exceljade supra at paragraph 112, also emphasized, in particular, that
where findings of fact are based on any practical experience in a field, the courts will be
very cautious in interfering with the findings. This is of significance as a large number of
commercial arbitrations are to resolve disputes arising in complex transactions, like
construction or oil and gas, where the arbitral tribunal has been chosen for their
experience in that field.
These principles have been consistently applied by the courts, who have declined to
review findings of fact made by arbitral tribunals based on the evidence presented before
such a tribunal. (15)
P 322
P 323

193
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court, in Sagau Batu Bala v. Zaharah Mustapha Raja Sewa & Anor & Other Cases
[2013] 10 CLJ 683 at paragraphs 32 and 33, appears to have reviewed the findings of fact
made by the arbitral tribunal. The High Court, after such a review, held that the findings of
fact were based on inadmissible evidence and were not supported by evidence. This
judgment does not appear to accord with the principles set out above.
The High Court, in Telekom Malaysia Berhad v. Eastcoast Technique (M) Sdn Bhd & Another
Case [2014] 6 CLJ 1067 at paragraphs 40-42, while considering an application under section
42 of the Arbitration Act 2005 decided that the arbitral tribunal’s findings of undue
influence and the quantum of damages were unsupported by evidence. However, the High
Court appears to have allowed the application not on these grounds but on the grounds
that the law applicable to undue influence and the assessment of damages was wrongly
applied by the arbitral tribunal.
The High Court, in Sunway City Sdn Bhd v. Syarikat Pembinaan Yeoh Tiong Lay Sdn Bhd
[2018] MLJU 1086 at paragraph 67, intervened under section 42, on the basis that the
arbitrator had taken an unduly restrictive view of the law on the admissibility of evidence.
This decision also does not accord with the principles set out above.
[2] Law
The purpose of section 42 is to allow a party to refer a question of law arising out of the
award to the High Court for determination.
As stated above, the courts will accept such a reference where there is a ‘question of law’
either based on the approach that this is stage (2) of the arbitral tribunal’s reasoning
process.
These are the principles. In practice, a question of law that is likely to persuade the courts
to intervene is where the arbitral tribunal has clearly disregarded binding precedent.
This issue arose in the judgment of the High Court, in Sanlaiman supra at paragraph 46,
where it was held that although the issue did not need to be determined in that case, if an
arbitral tribunal was so bold as not to follow judicial precedent, then that would amount to
a classic instance where the courts may intervene under section 42.
The other instance where the courts will intervene is where the arbitral tribunal has
misunderstood or misapplied the law. This can perhaps be best seen in the judgment of
the High Court, in Telekom Malaysia supra at paragraph 39, where the High Court was
compelled to intervene as the arbitral tribunal had misapplied the law on undue influence
by deciding that parts of the contract may be void for undue influence. This was untenable,
as the whole contract would be rendered void if undue influence was present.
P 323
P 324
Although the courts are prepared to intervene where the arbitral tribunal has disregarded
binding judicial precedent or misapplied the law, the courts do recognize that in some
instances more than one view may be held as to the application of the law to the facts and
will not intervene simply because they hold a different view from the arbitral tribunal.
This can be seen from the judgment of the Court of Appeal, in Tridant Engineering (M) Sdn
Bhd v. Ssangyong Engineering & Construction Co Ltd [2017] 2 CLJ 393 at paragraph 41, where
it was, inter alia, held:
… Of course the learned arbitrator was faced with two interpretations of law and
fact which we did not find them perverse and we say that for the simple reason
that even we held different views among ourselves as to which interpretation
should prevail. It must not be forgotten that the arbitration was convened for
the simple reason to resolve the competing interpretations by their chosen
arbitrator. That being the case, it would be farcical for the court to intervene
when in the first place the parties had agreed to abide by the referee’s
decision.
This principle was confirmed by the Federal Court, in Far East Holdings supra at paragraphs
131 and 150(d).
[3] Construction
The courts recognize that the construction of a contract is a question of law. Therefore,
questions on the construction of a contract may be referred to the court for determination
under section 42 of the Arbitration Act 2005.
The Federal Court, in Far East Holdings supra at paragraph 155, emphasized that it was
more than settled that the construction of a document is a question of law. This principle
has also been applied by the High Court in Maimunah Deraman v. Majlis Perbandaran
Kemaman [2011] 9 CLJ 689 at paragraph 28; Lembaga Kemajuan Ikan supra at paragraph 21;
and Sunway City supra at paragraphs 42, 57 and 60.
Although the courts regard the construction of a contract as giving rise to a question of law,
intervention under section 42 is limited, as the courts recognize that a contract may be
open to more than one interpretation. The courts will not intervene simply because the
arbitral tribunal has adopted one interpretation when there was another available. This

194
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 can be seen from the judgment of the High Court, in Sabah Medical Center Sdn Bhd v.
Syarikat Neptune Enterprise Sdn Bhd [2011] 1 LNS 849 at pages 31 and 32, and the judgment
of the Federal Court, in Far East Holdings supra at paragraphs 131 and 150(d).
The courts will also not intervene, even if there is a more correct interpretation of the
contract, where the arbitral tribunal has proceeded on principles of construction that are
in accordance with the law.
In this context, the High Court, in Exceljade supra at paragraph 84, inter alia, held:
Even if it is contended that the arguments put forward by the Applicant here
more correctly reflect the position in law, this alone is insufficient to warrant
P 324 interference from this Court under section 42 of the Arbitration Act 2005. This is
P 325 because the reasoning and application of legal principles by the learned
Arbitrator is not so flawed as to warrant the conclusion that the Arbitrator has
proceeded on principles of construction which the law does not countenance … .
Similarly, the High Court, in Lembaga Kemajuan Ikan supra at paragraph 49, recognized
that there could be two possible interpretations and the arbitral tribunal was entitled to
take one provided it was not abhorrent to the law:
That conclusion or view is not one that is so abhorrent in law that it is not
sustainable. There are two views, even now. The Arbitral Tribunal chose one over
the other and reasons were given … .
Recently, the High Court, in Renoir Consulting (M) Sdn Bhd v. Alison Watson & Anor [2018]
MLJU 1352 at paragraphs 80 and 81, held that where there was a question of construction
and two interpretations were possible, the courts would not intervene unless the
arbitrator’s decision was perverse or manifestly unlawful.
[4] Mixed Fact and Law
A question of mixed fact and law may not be referred to the court for determination under
section 42 of the Arbitration Act 2005. The question referred must be a pure question of
law. The Court of Appeal has repeatedly emphasized this principle which has recently been
held to be trite.
In this context, the Court of Appeal, in Awangku Dewa Pgn Momin & Ors v. Superintendent of
Lands And Surveys, Limbang Division [2015] 3 CLJ 1 at paragraph 27, inter alia, held:
We wish to take the opportunity here to provide the following guidance for the
benefit of High Court Judges in dealing with a s. 42 reference. A High Court in
considering a s. 42 reference must not take lightly the duty to critically examine
the questions posed by the applicant and to ensure that the question referred
to the court is purely a question of law and not a question of mixed law and fact,
and is clearly and concisely framed, before embarking to entertain the
application and to answer the question posed. There should be no
complication, confusion or duplicity in framing the questions. Instead, there
should be simplicity and clarity. The legal burden is on the applicant to ensure
that these requirements are strictly complied with.
Subsequently, the Court of Appeal, in Tridant Engineering supra at paragraph 42, inter alia,
held:
Further, in our view, the manner in which the question of law was framed was
nothing more than a mixed question of law and fact ‘dressed up’ in a question of
law. It is trite that the court has no jurisdiction to a mixed question of fact and
law.
Recently, the Court of Appeal, in Taki Engineering Sdn Bhd v. Ipoh Tower Sdn Bhd [2019]
MLJU 66 at paragraph 21, inter alia, held:
… we found that Question 9 could not be said to be purely a question of law in
P 325 the first place. We were of the view that Question 9 was actually a question of
P 326 fact dressed up as a question of law. That being the case, the learned High
Court Judge had erred when she found Question 9 to be purely a question of law
and proceeded to rule on the issue and set aside the part of the learned
Arbitrator’s Award.
These principles were developed in the High Court, by judgments like Lembaga Kemajuan
Ikan supra at paragraph 12, Magna Prima supra at paragraph 57 and Tan Kong Han v. QDB
Ventures Sdn Bhd [2016] 1 LNS 860 at paragraph 56.
These principles stated by the Court of Appeal were subsequently applied by the High
Court, in Paling Construction Sdn Bhd v. The Government of Sarawak [2015] MLJU 810 at
paragraph 13; Kluang Health Care Sdn Bhd v. Lee Yong Beng & Another Case [2016] 1 CLJ 281
at paragraph 55; and Renoir Consulting supra at paragraph 76.
The High Court, in Exceljade supra at paragraphs 40 and 42 to 43, took a more nuanced
position on this issue. The courts, when dealing with a mixed question of fact and law,

195
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 should not intervene only because the courts would have decided differently from the
arbitral tribunal. Instead, the courts should only intervene where the decision made by the
arbitral tribunal could not have been reached by a reasonable person applying the correct
legal test:
[40] Leave to appeal on two questions of law was granted in respect of the
award handed down. At the High Court Eder J relied on the principles
enunciated inter alia, in Kershaw’s case and The Beleares (above) in relation to
the approach to be adopted by the Court in dealing with questions or errors of
law arising out of an arbitration award which calls for such award to be set
aside, varied or remitted. With regards to the question of mixed fact and law, it
was held by the Court as follows:-
… Fourthly, when a tribunal has reached a conclusion of mixed fact
and law, the court cannot interfere with that conclusion just because
it would not have reached the same conclusion itself. It can interfere
only when convinced that no reasonable person, applying the correct
legal test, could have reached the conclusion which the tribunal did:
or, to put it another way, it has to be shown that the tribunal’s
conclusion was necessarily inconsistent with the application of the
right test: The ‘Sylvia’ [2010] 2 Lloyd’s Rep 81 at 54-55. The same
extremely circumscribed power of intervention applies when it is
complained that a tribunal has incorrectly applied the law to the
facts. It is only if the correct application of the law leads inevitably
to one answer, and the tribunal has given another, that the court can
interfere. Once a court has concluded that a tribunal which correctly
understood the law could have arrived at the same answer as the
one reached by the arbitrator, the fact that the individual judge
himself would have come to a different conclusion is no ground for
disturbing the Award: The Chrysalis [1983] 1 Lloyd’s Rep 503 at 507 … .
…
[42] Eder J’s decision was upheld on appeal by the English Court of Appeal (see
[2013] EWCA CIV 156). Although the Court of Appeal did not articulate or
prescribe the correct test to be applied in setting aside an award, it would
appear that the Court of Appeal agreed with the test that no reasonable
tribunal correctly applying the relevant legal principles could have reached a
conclusion such as the arbitral tribunal did. At paragraph 26 of their judgment
they stated:-
In the first place, given the judge’s view that no reasonable tribunal
P 326 correctly applying the relevant legal principles could have reached
P 327 the conclusion that the contract was unenforceable, there was no
scope for remission. Only one answer is possible.
[43] Such an approach is echoed in the seminal textbook, The Law and Practice
of Commercial Arbitration in England Second Edition by Mustill and Boyd. In
essence, mistakes in factual findings will not be reviewed. The Court will also
decline to intervene unless the arbitrator’s conclusion stemmed from a clear
misunderstanding of the true legal principles.
This more nuanced approach appears to have been confirmed by the Federal Court, in Far
East Holdings supra at paragraphs 131 and 150(d).
[5] Damages
The Court of Appeal, in Pancaran Prima Sdn Bhd v. Iswarabena Sdn Bhd [2018] MLJU 968 at
paragraphs 42-45, considered a situation where an arbitrator had found that a party had
failed to prove loss of profits but, despite this, awarded a substantial sum based on
extraneous evidence. The Court of Appeal held that this gave rise to a question of law, as
based on settled principles, the arbitrator should have awarded nominal damages once
the party had failed to prove their claim.
[6] Interest
The courts have taken the position that any controversy between the parties on whether
interest may be awarded can give rise to a question of law.
This was decided by the Federal Court, in Far East Holdings supra at paragraph 187 and is
also reflected in the judgments of the High Court, in Kerajaan Malaysia (Kementerian
Sumber Asli Dan Alam Sekitar) v. Kumpulan Sakata Sdn Bhd [2016] 7 CLJ 412 at paragraph 31;
Kerajaan Malaysia v. Tasja Sdn Bhd [2016] 6 CLJ 738 at paragraphs 71 and 72; and Tasja Sdn
Bhd v. Kementerian Kesihatan Malaysia [2018] MLJU 536 at paragraph 31.
[7] Costs
There is uncertainty as to whether issues on costs can give rise to a question of law for the
purpose of a reference under section 42 of the Arbitration Act 2005.

196
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 This uncertainty arises from the judgment delivered by the Court of Appeal, in SDA
Architects supra, where Aziah Ali JCA at paragraph 32, inter alia, held:
I am in agreement with the respondent that where it is shown on the face of the
award that there has been an apparent failure by the arbitrator to exercise his
discretion judicially in the award of costs, then an error of law has occurred
which may give rise to a question of law that may be referred to the court under
s. 42 of the Act. I find support from the case of President of India v. Jadranska
Sobodna Plovidba (supra) which shows that a question of law may be formulated
on the basis that an error of law has been occasioned when the arbitrator has
failed to exercise his discretion judicially in making an award of costs … .
P 327
P 328
Hamid Sultan Abu Backer JCA, in SDA Architects supra at paragraph 47(f), inter alia, held:
AA 2005 specifically states that costs and expenses of the arbitration shall be at
the discretion of the arbitral tribunal. And to ensure that discretion is not made
illusory, s. 8 curtails the power of court to intervene in the discretionary
jurisdiction of the arbitrator. As the court’s role to decide on costs or quantum
had been specifically taken away by virtue of ss. 8 and 44 of AA 2005 it is
difficult even to fathom how the issue of costs in arbitral proceeding can be
framed as a question of law for the determination of the High Court when the
statute has specifically deprived the business of the High Court to deal with
costs. In addition, O. 69 r. 2(1) of RC 2012 does not also reserve any right to
review or decide on issue of costs which has been dealt by the arbitrator … .
The better view appears to be that costs can give rise to a question of law where the
arbitral tribunal has disregarded rules of law in awarding costs. There appears to be no
reason for treating costs differently from any other issue that may need to be determined
in arbitral proceedings. In determining all issues, the arbitral tribunal must act in
accordance with rules of law, and, if there is any dispute on this by a party, it should give
rise to a question of law that may be referred to the High Court under section 42 of the
Arbitration Act 2005.

[B] Arising Out of an Award

A question of law may only be referred to the High Court for determination if it arises out of
the award, as expressly provided in section 42(1) of the Arbitration Act 2005.
A question arising out of an award has been distinguished by courts from a question arising
out of the arbitral proceedings. The former is permissible, while the latter cannot form the
basis of a reference to the High Court under section 42.
This principle is reflected in the judgment of the Court of Appeal, in Perwira Bintang supra
at paragraph 57(c), where it, inter alia, held:
The question of law must arise from the award, not the arbitration proceeding
generally … .
This principle may also be seen in the judgments of the High Court, in Majlis Amanah
Rakyat supra at pages 12 and 13; Sabah Medical Centre supra at pages 29 and 30; Lembaga
Kemajuan Ikan supra at paragraph 17; Sagau Batu Bala supra at paragraph 16; and
Konsortium Lord-Saberkat supra at paragraph 43.
Although the question must arise from the award, the arbitral tribunal need not have made
an explicit ruling on the matter provided that the question can be argued based on the
findings of fact made by the arbitral tribunal.
The Court of Appeal, in Perwira Bintang supra at paragraph 56, emphasized this in the
following terms:
The broader approach that a question of law ‘arising out of an award’ should not
be taken to mean that the question of law must appear ‘on the record’ (ie,
P 328 within the four corners of an award), will be consistent with our own statutory
P 329 scheme, especially when s. 42(4) is considered.
In this context, the court, though focused on the award, may also look at the documents
referred to in the award. The High Court, in MMC Engineering supra at paragraph 41,
clarified this in the following way:
… When determining this reference, the Court is necessarily directing its focus
and attention to the four corners of the award and nothing more; although this
may extend to the documents or correspondence that were referred to or
mentioned in the award … .

[C] Not the Same Question

The Federal Court, in Far East Holdings supra at paragraphs 116, 151 and 152, confirmed that
any question of law may be referred to the courts regardless of whether or not the specific

197
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 question had been decided by the arbitral tribunal:
[116] With the common law jurisdiction of setting aside an award for ‘error on
the face of the award’ gone, the distinction between a general reference and a
specific reference, though pertinent under the AA 1952 … is not relevant.
…
[151] Given that the AA 2005 does not say so, we could not hold that a ‘question
of law’ must be the same one which the arbitral tribunal was asked to
determine … .
[152] Section 42 allows any question of law arising from the award. ‘Any question
of law’ is wider than ‘a question of law’. Since so, it would seem that s 42
contemplates a less narrow interpretation of ‘question of law’ … .
Prior to the judgment of the Federal Court, in Far East Holdings supra, there was some
concern about the requirement that a party may not refer a question for determination by
the High Court that had been determined by the arbitral tribunal. This is because section
42(1) expressly allows ‘any’ question of law to be referred to the High Court, which should
include a question that has been determined by the arbitral tribunal. These concerns were
lucidly articulated by the judgment of the High Court, in Zenbay supra at paragraphs 48
and 49:
[48] There is a possible tenth threshold requirement … that a plaintiff must
show that the questions of law to be determined by the court should not be the
same as those decided by the arbitral tribunal … .
[49] With respect, I am not in favour of a tenth threshold requirement. My view is
premised on the following reasons:
(a) neither s. 42 AA nor O. 69 RC, expressly or by necessary implication,
confines a court reference to a question of law which has not been decided
by the arbitral tribunal;
(b) s. 42(1) AA has expressly provided that ‘any’ question of law may be
referred to court. The wide meaning of the word ‘any’ in s. 42(1) AA should
be given effect … .
P 329
P 330
(c) an arbitral tribunal may have committed a single error of law which has
substantially affected the rights of a plaintiff. In such a case, if there exists
a tenth threshold requirement and the plaintiff is not able to identify any
question of law which has not been decided by the arbitral tribunal, there
may be an injustice to the plaintiff because the plaintiff is barred from
filing the court reference.
Apart from this, it is difficult to see how such a requirement can apply in the context of the
principles laid down in Exceljade supra, which have been repeatedly affirmed by the Court
of Appeal.
The judgment, in Exceljade supra, allows for any question of law to be referred to the High
Court in accordance with section 42. If the question has already been determined by the
arbitral tribunal, Exceljade supra suggests that the courts may still determine the question.
In doing so, the courts should read the award as a whole and accord some deference to the
decision of the arbitral tribunal on questions on which the arbitral tribunal has particular
experience.
This is reflected in Exceljade supra at paragraph 33, where it was held:
The third question considered by Justice Jackson was the degree of deference to
be shown the arbitrator’s decisions on questions of law … two principles were
reached, namely that:-
(i) The court should read an arbitral award as a whole in a fair and
reasonable way. The court should not engage in minute textual analysis.
(ii) Where the arbitrator’s experience assists him in determining a question of
law, such as the interpretation of contractual documents or
correspondence passing between members of his own trade or industry,
the court will accord some deference to the arbitrator’s decision on that
question. The court will only reverse that decision if it is satisfied that the
arbitrator, despite the benefit of his relevant experience, has come to the
wrong answer.
These concerns have now been addressed by the Federal Court, in Far East Holdings supra.
The earlier requirement that a party may not refer a question for determination by the
High Court under section 42 of the Arbitration Act 2005, that is, the same question referred
to the arbitral tribunal for determination, is reflected in the judgment of the Court of
Appeal, in Chain Cycle Sdn Bhd v. Kerajaan Malaysia [2016] 1 CLJ 218 at paragraphs 27 and
31, where it was, inter alia, held:

198
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [27] The respondent relied on the principle that has come to be known as the
Absalom exception and referred to the decision of the Federal Court in The
Government of India v. Cairn Energy India Pty Ltd & Anor [2012] 3 CLJ 423; [2011] 6
MLJ 441, affirming the same particularly the following passage:
…
[30] With respect we are not persuaded that we should depart from
the long line of authorities holding such a distinction. Thus, where a
specific matter is referred to arbitration for consideration, it ought
to be respected in that ‘no such interference is possible upon the
P 330 ground that the decision upon the question of law is an erroneous
P 331 one’. However, if the matter is a general reference, interference
may be possible ‘if and when any error appears on the face of the
award’ … .
…
[31] On our part having given consideration to the submission of respective
counsel we were not convinced that that Absalom exception was confined to
situations where the court was called upon to deal with ‘error of law on the face
of the award’ only. There was no valid reason why, in a situation under s 42 of
the AA, where ‘… any question of law arising out of an award’ was before the
court, such an exception or limitation ought not to also apply.
A similar position was taken by the Court of Appeal, in Tridant Engineering supra at
paragraphs 41 and 43. There is also a series of judgments by the High Court (16) that have
applied this principle based on the judgment of the Federal Court, in The Government of
India v. Cairn Energy India Pty Ltd & Anor [2012] 3 CLJ 423 at paragraph 30. Despite the
judgment of the Federal Court, in Far East Holdings supra, the Court of Appeal, in Taki
Engineering supra at paragraphs 19 and 23, continued to apply the Absalom exception.

[D] Substantially Affects the Rights of One or More of the Parties

Section 42(1A) of the Arbitration Act 2005 provides that the High Court shall dismiss a
reference unless the question of the law substantially affects the rights of the parties. This
requirement in section 42(1A) is mandatory, given the use of the word ‘shall’. (17)
To satisfy this mandatory requirement, the applicant must affirm an affidavit asserting that
one or more parties’ rights have been affected. The applicant will also have to provide an
explanation as to whose rights have been affected and the extent to which they have been
affected. As the rights affected most often are of a financial nature, the applicant should
provide particulars in terms of figures. The extent to which a party’s rights are affected
should be particularized, as the question of whether a party’s rights have been
substantially affected is relative and will depend on the facts of a particular case. (18)
The rights of a party that are substantially affected include rights arising from the award.
(19)
In the event this requirement is not satisfied, a reference shall be dismissed by the High
Court. It may also be open to the respondent to apply to strike out a reference, or certain
questions in a reference, where this requirement is not satisfied. (20)
P 331
P 332
[E] Mandatory Time Period
Section 42(2) of the Arbitration Act 2005 provides that a reference shall be filed within
forty-two days of the publication and receipt of the award. The time period provided for is
mandatory. (21)
Further, and in the light of section 8 of the Arbitration Act 2005, the High Court does not
appear to have the jurisdiction to extend the time provided for in section 42. (22)
The High Court will also not allow an application to amend a reference under section 42
after the timeline has expired, even if the original reference was made within the timeline.
(23)

[F] Identify the Question of Law

Section 42(2) of the Arbitration Act 2005 requires the applicant to identify the question of
law in the reference.
Based on this provision, the High Court, in Taman Bandar Baru supra at paragraph 23(d),
held that the applicant was obliged to ‘state the question of law arising from the award in
a concise manner’. This was confirmed by the Court of Appeal, in Perwira Bintang supra at
paragraph 57(a), where it was held that the question of law must be identified with
sufficient precision. The judgment in Taman Bandar Baru supra has also been followed by
several judgments of the High Court. (24)
The Court of Appeal, in Awangku Dewa supra at paragraph 27, further emphasized that the

199
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 question of law should be clearly and concisely framed. There should be no complication,
confusion or duplicity in framing the questions. Instead, there should be simplicity and
clarity. (25)
Therefore, the applicant must identify a question of law that is clear, concise, precise and
simple. The High Court, in Zenbay supra at paragraph 47(5), has held that if these
requirements are not met, an applicant may apply to amend the questions:
… the question of law should be clearly and sufficiently identified … If the
questions of law are not clearly and sufficiently identified … I am of the
respectful view that a plaintiff may apply to court to amend … so as to identify
clearly and sufficiently the questions of law to be determined by the court
(amendment application) …
Needless to say, an amendment application should be dismissed if there is
prejudice to a defendant which cannot be compensated in costs … .
P 332
P 333
[G] Grounds on Which the Reference Is Sought
Section 42(2) of the Arbitration Act 2005 provides that the applicant shall identify the
grounds on which the reference is sought. This requirement has been emphasized in
several judgments. (26)
The High Court, in MMC Engineering supra at paragraph 30, elaborated on this requirement
by explaining that the applicant would need to set out the findings of fact and law from
which the questions arise:
The Plaintiffs must furthermore explain the grounds for their grievance, the
basis for their claims. Here, the relevant factual findings and legal analysis that
form the grounds must be pointed out as the questions of law could not possibly
exist on their own, but necessarily emanate from some findings of fact or
analysis of the applicable legal principles.
The High Court, in Zenbay supra at paragraph 47(7), again held that if this requirement was
not complied with, the applicant could apply to amend the grounds in the application:
… the grounds for the court reference (grounds) should be stated … If the
grounds are not stated … in my view, an amendment application should be filed
to specify the grounds … .

[H] Particulars of Each Ground

Order 69 Rule 6(2)(c) of the Rules of Court 2012 requires the applicant to give particulars of
each ground on which the arbitral tribunal erred in law, with references to the paragraphs
or passages in the award where the alleged error was made.
There is no equivalent express provision in section 42 of the Arbitration Act 2005. However,
this may be implicit in section 42(2), which requires the applicant to state the grounds on
which the reference is sought.
The need for particulars of the grounds can be seen from the judgment of the High Court, in
Taman Bandar Baru supra at paragraph 23(d), where it was emphasized that the applicant
must state the ‘facts leading to the grounds’. The judgment of the High Court, in Taman
Bandar Baru supra, has subsequently been followed in several judgments of the High Court.
(27)
The Court of Appeal, in Awangku Dewa supra at paragraph 25, also emphasized the need for
the applicant to ‘set out the complete facts of the case, facts that are necessary or relevant
for the purposes of the questions posed’.
P 333 The High Court, in Zenbay supra at paragraph 47(8), recognized the need to state the
P 334 particulars of each ground as a threshold requirement. The High Court also suggested
that if this requirement was not complied with, the applicant might apply to amend the
application.

[I] Service of the Application

Order 69 Rule 6(4) of the Rules of Court 2012 requires the applicant to serve the application
and the affidavit on each arbitrator and the respondent.
The High Court, in Zenbay supra at paragraph 47(9), recognized the need for service as an
additional threshold requirement. The High Court also suggested that if the application
had not been served on the arbitral tribunal, the applicant could undertake to do so. In
any event, the High Court opined that such non-compliance may be cured.

§42.03 DETERMINATION STAGE

The High Court may, once the threshold requirements in sections 42(1), (1A) and (2) of the
Arbitration Act 2005 are met, determine the reference on a question of law.

200
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [A] The Correct Approach
In determining the reference, the approach the court should take is that if there is indeed
a question of law, as considered in §42.02[A] supra, then the court should proceed to
determine it.
This can be seen from the judgment of High Court, in Exceljade supra at paragraphs 52 and
53, where it was, inter alia, held:
[52]… the question that a court needs to ask itself is whether the question
framed before it is indeed a question of law.
[53] If it is, the Court should then proceed to decide it … It is pertinent that no
restrictive language is used, and the Court is given express power to set aside
the award in whole or in part as a result of the reference on ‘any question of law
arising out of an award’.
This approach was subsequently endorsed by the Court of Appeal, in Perwira Bintang supra
at paragraphs 53-57.
Subsequently, the Court of Appeal, in Chain Cycle supra at paragraph 20, noted that the
parties accepted that the approach to be taken by the courts during the determination
stage was settled, in the light of Exceljade supra and Perwira Bintang supra. This approach
was also confirmed by the Federal Court, in Far East Holdings supra at paragraph 156.
This approach has been termed the ‘process of reasoning’ approach, by the High Court in
Zenbay supra at paragraph 52 based on Exceljade supra, where the High Court emphasized
the need to consider the three-stage reasoning of an arbitral tribunal, as explained in
§42.02[A] supra, with the second stage being the most likely to yield a question of law.
P 334
P 335
There is an alternative approach, which has been termed the ‘patent error of law’
approach by the High Court in Zenbay supra at paragraph 51. This approach requires an
erroneous legal proposition that forms the basis of the arbitral tribunal’s decision and that
appears on the face of the award or in a document incorporated in the award. This
approach is stricter than the ‘process of reasoning’ approach that allows for questions of
law that arise from the award, even if they do not appear on the face of the award, and are
not the subject of an explicit ruling by the arbitral tribunal, so long as they can be argued
as the basis of the findings of fact made by the arbitral tribunal. (28)
The stricter ‘patent error of law’ approach was first adopted by the High Court, in Majlis
Amanah Rakyat supra at page 13. This approach was subsequently followed by the High
Court, in Maimunah Deraman supra at paragraphs 22 and 23, Rmarine Engineering supra at
paragraph 16 and Lembaga Kemajuan Ikan supra at paragraphs 18-21.
All these judgments by the High Court were prior to Exceljade supra. This is significant
because Ariff JCA, who had adopted the ‘patent error of law approach’ in Majlis Amanah
Rakyat supra, accepted in Perwira Bintang supra, after Exceljade supra, that the ‘process of
reasoning’ approach was the better approach.
Despite this, there has been subsequent reliance by the courts on the ‘patent error of law
approach’. The Court of Appeal, in SDA Architects supra at paragraph 32, and the High Court,
in Jamilah Abdul Hamid supra at pages 9 and 10, appear to adopt this approach without any
consideration of the judgment in Exceljade supra. The High Court, in MMC Engineering supra
at paragraph 52, and the minority judgment of Hamid Sultan JCA, in Petronas Penapisan
supra at paragraphs 25-27, appear to support the continued application of the ‘patent
error of law’ approach, despite the judgments in Exceljade supra and Perwira Bintang supra.
However, the majority judgment of Abraham JCA, in Petronas Penapisan supra at paragraph
38, appears to endorse the ‘process of reasoning’ approach by reference to Chain Cycle
supra.
It is submitted that, in the light of the judgment of the High Court, in Exceljade supra, that
was endorsed by the Court of Appeal, in Perwira Bintang supra, regarded as settled by the
Court of Appeal, in Chain Cycle supra, and confirmed by the Federal Court, in Far East
Holdings supra, that the ‘process of reasoning’ approach is the correct approach to be
adopted by the courts at the determination stage.

[B] Not an Appeal

A reference under section 42 of the Arbitration Act 2005 is not an appeal to the High Court.
The High Court does not have the broad appellate jurisdiction it has over subordinate
courts when considering a reference under section 42. Instead, the High Court has a
supervisory jurisdiction that is confined to the express provisions of section 42.
P 335 These principles have been repeatedly emphasized by the Court of Appeal. For example,
P 336 in Chain Cycle supra at paragraph 66:
The pressure was definitely on the courts therefore to be ever vigilant and to
resist attempts to engage the courts in a review of the arbitral award on its
merits, akin to an ‘appeal’, often camouflaged masterly as ‘questions of law’.

201
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 There was no room for any dispute that the curial function of the court under s.
42 of the Arbitration Act 2005 was only intended by the legislature to be
extended to questions of law per se, that too, which would affect substantially
the rights of one or the other party.
Similarly, in Petronas Penapisan supra at paragraph 38, it was held that ‘section 42 is not a
provision as to appeals but a reference on questions of law.’ Subsequently, in Tridant
Engineering supra at paragraph 43, it was held ‘Further, the courts do not sit in an appellate
function when hearing references from arbitral proceeding. Their function is only one of
very limited supervisory nature.’ (29)

[C] Minimal Intervention

Section 42 of the Arbitration Act 2005 expressly allows the High Court to determine a
question of law arising from an award. To that extent, the High Court is entitled to
intervene in accordance with section 8 of the Arbitration Act 2005. The High Court may only
intervene if all the threshold requirements specified in §42.02 supra are satisfied.
However, once these threshold requirements are met, the High Court should proceed to
determine the question of law referred. The High Court should not, at the determination
stage, hesitate to determine the question posed on any overriding principle of non-
intervention.
These principles were lucidly set out in the judgment of the High Court, in Exceljade supra
at paragraphs 31 and 32, where it was, inter alia, held:
[31] Under our Arbitration Act 2005, section 42 expressly allows for a question of
law to be referred to the Court without the need for any preliminary filter or
leave application, the only qualification being that such question of law must
affect substantially the rights of the parties in order to warrant interference or
intervention by the High Court. To this end therefore the reasoning adopted by
Justice Jackson in Kershaw’s case may well be similarly applicable to our
present case under section 42.
[32] In other words, while there may well be a spirit and philosophy of non-
interference underlying the promulgation of the Arbitration Act 2005, such a
philosophy must give way to the express provisions of the Act, such as section
42. It articulates an entitlement to refer a question of law to the High Court
where such a question of law substantially affects the rights of the parties.
Therefore effect must be accorded as legislatively pronounced.
The jurisprudence behind these principles and the attempt to find a middle path through
P 336 section 42 between total non-intervention by the courts and the courts continuing to
P 337 exercise supervisory or appellate oversight over arbitral proceedings was elaborated by
the Court of Appeal, in Chain Cycle supra at paragraphs 63 and 64, where it was, inter alia,
held:
[63] … We have on the one side those who advocate a stance that there should
be absolute judicial restraint and deference to the finality of an arbitral award.
They say that the parties agreeing to arbitration were agreeing to the arbitrator
getting it wrong and there should be total non-intervention by the civil courts.
On the other end of the swing of the pendulum were those who argue that
national courts, particularly in domestic arbitration, should not abdicate their
sovereignty to have complete supervisory and appellate oversight over
subordinate tribunals, which they equate the arbitral process to be one. Hence,
the views expressed yet by some that the checks on arbitral awards should be
structured and tested more in the nature of ‘judicial review’ proceedings that is
currently on the rule book.
[64] The legislative intent behind allowing reference to be brought on questions
of law (s. 42 of the Arbitration Act 2005) to the court appear to be to cut a
middle path between those divergent positions, namely, to allow the courts a
limited role to re-examine issues or questions of law arising out of an award … .
This was subsequently endorsed by the Court of Appeal, in Petronas Penapisan supra at
paragraph 38, where it was also emphasized that once the threshold requirements were
met the court should proceed to determine the question as there was no risk of opening
the floodgates:
We agree with the approach of the learned judge that the court must intervene
where the award is manifestly unlawful and unconscionable. Section 42 has no
equivalent in the Model Law or in parallel jurisdictions. Section 42 is not a
provision as to appeals but a reference on a question of law … We are of the
opinion that with the pre-requirements of s. 42, it followed there would be no
danger of ‘opening the floodgates’ in respect of review of arbitral awards.
General statements about the non-intervention of the courts should be read in the light of
these specific principles. The Federal Court, in Far East Holdings supra at paragraph 118,
emphasized that there were no additional requirements to the effect that the courts would

202
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 only intervene in clear and exceptional cases, where the award was manifestly perverse,
unconscionable or unlawful, as such additional requirements were not expressly stated in
section 42:
An award might or might not be perverse, unconscionable, unreasonable, and
the like. But it only matters whether there is a question of law arising out of the
award that substantially affects the rights of one or more of the parties. Under s
42, that is the only ground for the court to intervene. Perverse, unconscionable,
unreasonable, and the like are not tests for the setting aside of an award. The
so-called guidelines (g) ‘This jurisdiction under s 42 is not to be lightly
exercised, and should be exercised only in clear and exceptional cases’; (h)
‘Nevertheless, the court should intervene if the award is manifestly unlawful
and unconscionable’; and (j) ‘While the findings of facts and the application of
legal principles by the arbitral tribunal may be wrong (in instances of findings
of mixed fact and law), the court should not intervene unless the decision is
perverse’, stated in Perwira Bintang are not in line with s 42 and should not be
followed.
P 337
P 338
The judgment of the Federal Court, in Far East Holdings supra, and its effect, was later
summarized by the High Court, in Tidalmarine Engineering Sdn Bhd v. Kerajaan Malaysia
(Jabatan Kerja Raya Malaysia) [2018] MLJU at paragraph 45:
However, subsequently the Federal Court in the case of Far East Holdings Bhd &
Anor v. Majlis Ugama Islam dan Adat Resam Melayu Pahang & Other Appeals
[2018] 1 CLJ 693 held that the guidelines (g), (h) and (j) stated in Perwira Bintang
are not in line with section 42 and should not be followed. The Federal Court
held that under s. 42, the only ground for the court to intervene is whether there
is a question of law arising out of the award that substantially affects the rights
of the parties.

[D] Relationship with an Application to Set Aside

Section 37 of the Arbitration Act 2005 provides for applications to set aside an award due
to errors of process. Section 42 allows for an award to be confirmed, varied, remitted or set
aside due to errors of substantive law.
As the two sections deal with separate matters, there is no need for the grounds in section
37 to be satisfied before a reference may be made under section 42. This was confirmed by
the High Court, in Lembaga Kemajuan Ikan supra at paragraph 10, where it was, inter alia,
held:
While the courts generally take a limited jurisdiction approach in matters
concerning arbitration and arbitral awards, it is quite different to say that s. 42
is not engaged unless and until the applicant proves that its questions of law
are founded on the grounds set out in s. 37. If s. 37 is examined, it can be seen
that the grounds there are not necessarily those relating to only questions of law
but instead are more of mixed fact and law. For example, grounds such as
incapacity or sufficiency of notice (sub-ss. 37(a) and (c)).
Although section 37 deals with errors of process and section 42 deals with errors of
substantive law, the two provisions are not mutually exclusive. This was explained by the
Court of Appeal, in Petronas Penapisan supra at paragraph 36:
… the approach of the learned judge was to treat applications under both
sections as not being mutually exclusive … .
We are therefore in agreement with the views of the learned judge expressed on
this point.
A similar position was taken by the Court of Appeal, in Perwira Bintang supra at paragraph
62, where it was, inter alia, held that the same grounds could form the basis of an
application under sections 37 and 42 provided that the threshold requirements of section
42 were met:
Counsel for the appellant has, in the course of her submission, questioned
whether it was right to duplicate the grounds under s. 37 as grounds under s. 42
of the Act. We are not persuaded why similar grounds cannot be raised under s.
42, if all the requirements under the section can be fulfilled.
P 338
P 339

§42.04 RELIEF STAGE

Section 42(2) of the Arbitration Act 2005 provides that the High Court ‘may’, on
determination of the reference, confirm, vary, remit or set aside the award. The use of the
word ‘may’ in section 42(4) means that the High Court has the discretion on the type of

203
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 relief to be granted even if the threshold requirements are met and the question has been
determined in the applicant’s favour. (30) The High Court will exercise this discretion in
accordance with the principles in §42.03 supra.

§42.05 ORDER TO STATE REASONS

Section 42(3) of the Arbitration Act 2005 allows the High Court to order the arbitral tribunal
to state the reasons for the award, where the award does not have reason or has
insufficient reasons.
The power granted to the High Court is discretionary, as can be seen from the use of the
word ‘may’ in section 42(3).
The High Court is likely to exercise its discretion in favour of an applicant where the
arbitration agreement expressly requires reasons. Where the arbitration agreement is
silent as to whether reasons are to be provided for an award, the presumption under
section 33(3) of the Arbitration Act 2005 is that reasons are to be given. This presumption
will only be displaced if there is an agreement that reasons need not be given for the
award. Such an agreement may be express or implicit, where it is the practice in an
industry that reasons are not given for an award, as explained in §33.04 supra. Where there
is an agreement, express or implied, that reasons will not be given, the High Court is
unlikely to exercise their discretion, under section 42(3) by ordering reasons. In any event,
it is submitted that the High Court may not be entitled to order reasons where there is an
agreement to dispense with reasons for the award.
The ability of the High Court to order that reasons be given may be viewed as an attempt
to overcome the High Court’s inability otherwise to determine a question of law arising
from the award. By ordering reasons, the High Court can determine, from these reasons, if
there has been an error.
This view was expressed by the High Court, in Exceljade supra at paragraph 62:
… Section 42(3) overcomes this problem by allowing the Court to order the
arbitrator to give reasons supporting the award so that it can determine
whether or not to set aside or vary or confirm the award premised on the
question of law posed … .
Section 42(7) of the Arbitration Act 2005 provides that the High Court may make an order as
to costs, where an order is made for reasons to the award to be stated.
P 339
P 340

§42.06 ORDER FOR SECURITY

Section 42(8) of the Arbitration Act 2005 provides that the High Court may, pending the
determination of the reference, order the applicant to provide security for costs and that
any money payable under the award be brought into court or otherwise secure.
Hamid Sultan JCA, in Petronas Penapisan supra at paragraph 22, held that the need for
security should be the first consideration when a reference is made under section 42:
The first step is to consider the provision of s. 42(8) which relates to security.
That was not done in this case. Though I take note on the facts of the case and
financial strength of the parties, it was not necessary.
However, this judgment, which was in the minority in the Court of Appeal, in Petronas
Penapisan supra, does not appear to have been subsequently applied.
The High Court has the discretion whether to order security for costs, as can be seen from
the use of the word ‘may’. The High Court is likely to exercise this discretion against the
applicant, where there is credible evidence that the applicant is unable to pay costs and
the applicant does not provide any grounds against security being ordered.
This can be seen from the judgment of the High Court, in Mechanalysis Sdn Bhd (in
liquidation) v. Appraisal Property Management Sdn Bhd [2016] 8 CLJ 81 at paragraphs 48-55.
The High Court also held that where the applicant was in liquidation, this would be a
sufficient basis for an order for security. Further, where the arbitral tribunal had found that
the applicant was unable to pay costs, in a similar application during the arbitral
proceedings, and the applicant had not provided any evidence of a change in
circumstances, the High Court would treat the findings of the arbitral tribunal as
conclusive.
The High Court similarly has the discretion whether to order the applicant to bring the
amount awarded into court or otherwise secure such sum. The High Court will exercise this
discretion by considering the following factors:
(1) whether an order for security will detrimentally affect or prejudice the applicant;
(2) whether the applicant continues to be able to meet the award;
(3) whether the reference is legitimate and is not otherwise frivolously instituted to
delay the proceedings.

204
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 This again can be seen from the judgment of the High Court, in Mechanalysis supra at
paragraphs 59-61.
P 340
P 341

43. Appeal
[deleted by section 13 of the Arbitration (Amendment) (No 2) Act 2018]

§43.01 INTRODUCTION
Section 43 of the Arbitration Act 2005, prior to its deletion by the Arbitration (Amendment)
(No 2) Act 2018, provided that:
A decision of the High Court under section 42 shall be deemed to be a judgment
of the High Court within the meaning of section 67 of the Courts of Judicature Act
1964 [Act 91].
Section 43 of the Arbitration Act 2005 equated a decision of the High Court under section
42 with a judgment of the High Court under section 67 of the Courts of Judicature Act 1964.
Section 67 of the Courts of Judicature Act 1964 provides:
Jurisdiction to hear and determine civil appeals
67. (1) The Court of Appeal shall have jurisdiction to hear and determine appeals
from any judgment or order of any High Court in any civil cause or matter,
whether made in the exercise of its original or of its appellate jurisdiction,
subject nevertheless to this or any other written law regulating the terms and
conditions upon which such appeals shall be brought.
(2) The Court of Appeal shall have all the powers conferred by section 24A on the
High Court under the provisions relating to references under order of the High
Court.
Section 43 effectively provided, therefore, that a decision of the High Court under section
42 may be appealed to the Court of Appeal.
This can be contrasted with other provisions of the Arbitration Act 2005, which provide that
no appeal shall lie against a decision of the High Court under these provisions. (31)
Section 43, which is consequential to section 42, was also deleted by the Arbitration
(Amendment) (No 2) Act 2018 for the same reasons as set out under §42.01 supra.
P 341
P 342

44. Costs and Expense of an Arbitration

(1) Unless otherwise agreed by the parties –
(a) the costs and expenses of an arbitration shall be in the discretion of the arbitral
tribunal who may –
(i) direct to and by whom and in what manner those costs or any part thereof
shall be paid;
(ii) tax or settle the amount of such costs and expenses; and
(iii) award such costs and expenses to be paid as between solicitor and client;
(b) any party may apply to the High Court for the costs to be taxed where an arbitral
tribunal has in its award directed that costs and expenses be paid by any party,
but fails to specify the amount of such costs and expenses within thirty days of
having being requested to do so; or
(c) each party shall be responsible for its own legal and other expenses and for an
equal share of the fees and expenses of the arbitral tribunal and any other
expenses relating to the arbitration in the absence of an award or additional
award fixing and allocating the costs and expenses of the arbitration.
(2) Unless otherwise agreed by the parties, where a party makes an offer to the other party
to settle the dispute or part of the dispute and the offer is not accepted and the award
of the arbitral tribunal is no more favourable to the other party than was the offer, the
arbitral tribunal, in fixing and allocating the costs and expenses of the arbitration, may
take the fact of the offer into account in awarding costs and expenses in respect of the
period from the making of the offer to the making of the award.
(3) An offer to settle made under subsection (2) shall not be communicated to the arbitral
tribunal until it has made a final determination of all aspects of the dispute other than
the fixing and allocation of costs and expenses.
(4) Where an arbitral tribunal refuses to deliver its award before the payment of its fees and
expenses, the High Court may order the arbitral tribunal to deliver the award on such
conditions as the High Court thinks fit.
(5) A taxation of costs, fees and expenses under this section may be reviewed in the same

205
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 manner as a taxation of costs.

§44.01 INTRODUCTION
Section 44 of the Arbitration Act 2005 provides for the manner in which the costs and
expenses in an arbitration may be determined. In particular, section 44 also provides for
the determination of costs in the face of an offer to settle, and for a situation where the
arbitral tribunal refuses to deliver their award until their fees and expenses are settled.
P 342
P 343
Section 44 of the Arbitration Act 2005 is not based on the 1985 Model Law. The 1985 Model
Law does not provide for costs. This was left to each State to legislate on.
Section 44 of the Arbitration Act 2005 is based on clause 6 of Schedule 2 of the New
Zealand Arbitration Act 1996. In particular:
(1) section 44(1)(a) is similar to clause 6(1)(a) but does not include the definition of costs
found in clause 6(1)(a). Sections 44(1)(a)(i) to (iii) provide for the authority the arbitral
tribunal has in awarding costs in detail, which details are not found in clause 6;
(2) section 44(1)(b) is not found in the New Zealand Arbitration Act 1996. Section 44(1)(b)
provides for a particular situation where the arbitral tribunal has specified which
party is to pay costs but has not fixed the amount of such costs;
(3) section 44(1)(c) is effectively the same as clause 6(1)(b);
(4) section 44(2) is effectively the same as clause 6(2)(a);
(5) section 44(3) is effectively the same as clause 6(2(b);
(6) section 44(4) is effectively the same as clause 6(4)(a);
(7) section 44(5) is not found in the New Zealand Arbitration Act 1996; and
(8) clauses 6(3), (5) and (6) are not found in the Arbitration Act 2005. The omission of
clause 6(3) is particularly significant. The High Courts in Malaysia do not have the
express authority to review the allocation and amount of costs fixed by the arbitral
tribunal on the grounds that such allocation or amount is unreasonable unlike the
position in New Zealand.
Section 44 appears in Part III of the Arbitration Act 2005. Therefore, it applies to domestic
arbitrations unless the parties agree to exclude this section. Section 44 will not apply in an
international arbitration unless the parties agree to include it.

§44.02 DETERMINATION OF COSTS

Section 44(1) of the Arbitration Act 2005, like the 1985 Model Law, allows the parties to
agree on how costs are to be determined. In the absence of such agreement:
(1) section 44(1)(a) provides that the arbitral tribunal shall determine costs;
(2) section 44(1)(b) provides that the High Court may determine the amount of costs
where the arbitral tribunal has only determined who is to pay costs; and
(3) section 44(1)(c) provides that the parties shall bear their own costs and an equal
portion of the arbitral tribunal’s fees and expenses where the arbitral tribunal has
not made any award on costs.
These four scenarios are considered below, namely:
(1) where there is an agreement on how costs are to be determined;
(2) where the arbitral tribunal determines costs;
P 343
P 344
(3) where the arbitral tribunal determines who will bear the costs and the High Court
determines the amount of such costs; and
(4) where the arbitral tribunal does not determine costs.

[A] Agreement on How Costs Will Be Determined

In practice, the parties, if they agree on how costs are to be determined, will do so by
agreeing to the rules published by an arbitration institution.
For example, the parties may agree to the adoption of the 2018 AIAC Arbitration Rules. Rule
13 of the 2018 AIAC Arbitration Rules provides:
Costs
1. The term ‘costs’ as specified in Article 40 shall also include the expenses
reasonably incurred by the AIAC in connection with the arbitration, the
administrative fees of the AIAC as well as the costs of the facilities made
available by the AIAC under Rule 11.
2. Unless otherwise agreed by the Parties and the arbitral tribunal pursuant
to Rule 13(4), the fees of the arbitral tribunal shall be fixed by the Director
in accordance with Schedule 1.
3. Unless otherwise agreed upon by Parties in writing, Schedule 1(A) shall

206
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 apply to international arbitrations (USD scale) and Schedule 1(B) shall
apply to domestic arbitrations (RM scale).
4. Notwithstanding the above, all Parties and arbitral tribunal are at liberty
to agree on the fees and expenses of the arbitral tribunal within the
period of time of 30 days from the appointment of the arbitral tribunal
(the ‘Fee Agreement’). The arbitral tribunal shall inform the Director that
the Fee Agreement has been executed. If the Fee Agreement is executed
after the 30 day period has expired, the Fee Agreement shall be subject to
approval by the Director.
5. The AIAC administrative fees shall be fixed by the Director in accordance
with Schedule 1. Unless otherwise agreed by the Parties, Schedule 1(A)
shall apply to international arbitrations and Schedule 1(B) shall apply to
domestic arbitrations.
6. The costs of arbitration may, in exceptional, unusual or unforeseen
circumstances, be adjusted from time to time at the discretion of the
Director.
7. The arbitrator’s fees and the AIAC administrative fees under Schedule 1
are determined based on the amount in dispute. For the purpose of
calculating the amount in dispute, the value of any counterclaim and/or
set-off will be taken into account.
8. Where a claim or counterclaim does not state a monetary amount, an
appropriate value for the claim or counterclaim shall be settled by the
Director in consultation with the arbitral tribunal and the Parties for the
purpose of computing the arbitrator’s fees and the administrative fees.
9. The arbitral tribunal may determine the proportion of costs to be borne
by the Parties.

P 344 Articles 40-42 of the 2013 UNCITRAL Arbitration Rules, which form part of the 2018 AIAC
P 345 Arbitration Rules, provide:
Definition of costs
Article 40
1. The arbitral tribunal shall fix the costs of arbitration in the final award
and, if it deems appropriate, in another decision.
2. The term ‘costs’ includes only:
(a) The fees of the arbitral tribunal to be stated separately as to each
arbitrator and to be fixed by the tribunal itself in accordance with
article 41;
(b) The reasonable travel and other expenses incurred by the
arbitrators;
(c) The reasonable costs of expert advice and of other assistance
required by the arbitral tribunal;
(d) The reasonable travel and other expenses of witnesses to the extent
such expenses are approved by the arbitral tribunal;
(e) The legal and other costs incurred by the parties in relation to the
arbitration to the extent that the arbitral tribunal determines that
the amount of such costs is reasonable;
(f) Any fees and expenses of the appointing authority as well as the fees
and expenses of the Secretary-General of the PCA.
3. In relation to interpretation, correction or completion of any award under
articles 37 to 39, the arbitral tribunal may charge the costs referred to in
paragraphs 2 (b) to (f), but no additional fees.
Fees and expenses of arbitrators
Article 41
1. The fees and expenses of the arbitrators shall be reasonable in amount,
taking into account the amount in dispute, the complexity of the subject
matter, the time spent by the arbitrators and any other relevant
circumstances of the case.
2. If there is an appointing authority and it applies or has stated that it will
apply a schedule or particular method for determining the fees for
arbitrators in international cases, the arbitral tribunal in fixing its fees
shall take that schedule or method into account to the extent that it
considers appropriate in the circumstances of the case.
3. Promptly after its constitution, the arbitral tribunal shall inform the
parties as to how it proposes to determine its fees and expenses,
including any rates it intends to apply. Within 15 days of receiving that
proposal, any party may refer the proposal to the appointing authority for
review. If, within 45 days of receipt of such a referral, the appointing

207
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 authority finds that the proposal of the arbitral tribunal is inconsistent
with paragraph 1, it shall make any necessary adjustments thereto, which
shall be binding upon the arbitral tribunal.
4. (a) When informing the parties of the arbitrators’ fees and expenses that
have been fixed pursuant to article 40, paragraphs 2 (a) and (b), the
arbitral tribunal shall also explain the manner in which the corresponding
amounts have been calculated;
(b) Within 15 days of receiving the arbitral tribunal’s determination of
fees and expenses, any party may refer for review such
determination to the appointing authority. If no appointing authority
has been agreed upon or designated, or if the appointing authority
fails to act within the time specified in these Rules, then the review
shall be made by the Secretary-General of the PCA;
(c) If the appointing authority or the Secretary-General of the PCA finds
that the arbitral tribunal’s determination is inconsistent with the
arbitral tribunal’s proposal (and any adjustment thereto) under
paragraph 3 or is otherwise manifestly excessive, it shall, within 45
P 345 days of receiving such a referral, make any adjustments to the
P 346 arbitral tribunal’s determination that are necessary to satisfy the
criteria in paragraph 1. Any such adjustments shall be binding upon
the arbitral tribunal;
(d) Any such adjustments shall either be included by the arbitral
tribunal in its award or, if the award has already been issued, be
implemented in a correction to the award, to which the procedure of
article 38, paragraph 3, shall apply.
5. Throughout the procedure under paragraphs 3 and 4, the arbitral tribunal
shall proceed with the arbitration, in accordance with article 17,
paragraph 1.
6. A referral under paragraph 4 shall not affect any determination in the
award other than the arbitral tribunal’s fees and expenses; nor shall it
delay the recognition and enforcement of all parts of the award other than
those relating to the determination of the arbitral tribunal’s fees and
expenses.
Allocation of costs
Article 42
1. The costs of the arbitration shall in principle be borne by the unsuccessful
party or parties. However, the arbitral tribunal may apportion each of
such costs between the parties if it determines that apportionment is
reasonable, taking into account the circumstances of the case.
2. The arbitral tribunal shall in the final award or, if it deems appropriate, in
any other award, determine any amount that a party may have to pay to
another party as a result of the decision on allocation of costs.
The benefits of incorporating the rules of an arbitration institution can be seen from these
provisions on costs, particularly:
(1) the detailed definition of ‘costs’ provided in Article 40(2) of the 2013 UNCITRAL
Arbitration Rules and Rule 13(1) of the 2018 AIAC Arbitration Rules;
(2) the arbitrator’s scale of fees in Schedule I of the 2018 AIAC Arbitration Rules; and
(3) the principles for the allocation of costs set out in Article 42 of the 2013 UNCITRAL
Arbitration Rules.

[B] Arbitral Tribunal Determines Costs

Section 44(1)(a) of the Arbitration Act 2005 gives the arbitral tribunal the discretion to
decide:
(1) who shall pay costs;
(2) the amounts of such costs; and
(3) that such amount may be on a solicitor-client basis.
Generally, costs will follow the event, and the arbitral tribunal will order the unsuccessful
party to pay the costs of the successful party. If this rule is departed from, it would be
prudent for the arbitral tribunal to give reasons for the departure.
P 346 The amount of costs awarded, in terms of legal fees, will depend on the complexity of the
P 347 dispute and the length of time spent. Other costs, such as the arbitral tribunal’s fees and
expenses, the arbitral institution’s fees and venue rentals will reflect the actual cost
incurred by a party which may be readily proved.
The courts will not generally interfere with an arbitral tribunal’s discretion in determining
costs. This is because section 44(1)(a) expressly grants the discretion to award costs to the
arbitral tribunal. This section, taken together with section 8 of the Arbitration Act 2005,

208
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 suggests that the courts should not intervene in the exercise of this discretion by the
arbitral tribunal. (32)
However, where the arbitral tribunal fails to exercise this discretion judicially, it may give
rise to a question of law that can be referred to the High Court under section 42 of the
Arbitration Act 2005. (33)

[C] Where the Arbitral Tribunal Determines Who Pays Costs and the High Court
Taxes the Amount of Costs
Section 44(1)(b) of the Arbitration Act 2005 provides that:
(1) where the arbitral tribunal specifies who is to pay costs but does not fix the amount
of costs in the award;
(2) and, the arbitral tribunal does not fix the amount of such costs thirty days after
having been requested to do so;
(3) then, either party may apply to the High Court to fix the amount of such costs.
The High Court, in fixing such costs, will apply similar principles as those outlined in
§44.02[B] supra.

[D] Where Costs Are Not Determined

Section 44(1)(c) of the Arbitration Act 2005 provides for a situation where the arbitral
tribunal has not made any determination of costs. In this circumstance, a distinction is
made between:
(1) the parties, legal and other expense; and
(2) the arbitral tribunal’s fees and expenses.
The former is to be borne by each party, while the latter is to be equally shared.
P 347
P 348

§44.03 OFFER TO SETTLE

Sections 44(2) and (3) of the Arbitration Act 2005 provide that where:
(1) Party A makes a settlement offer to Party B;
(2) Party B does not accept Party A’s settlement offer;
(3) the award is no more favourable to Party B than Party A’s settlement offer;
(4) Party A has communicated their settlement offer to the arbitral tribunal after the
determination of all aspects of the dispute other than costs;
(5) then the arbitral tribunal may take Party A’s settlement offer into account when
determining costs between the date of the settlement offer and the award.
Generally, in these circumstances, the arbitral tribunal will order Party B to pay the costs
between the date of Party A’s settlement offer and the award. If the arbitral tribunal
departs from this general rule, it would be prudent to provide reasons. It is important to
bear in mind, however, that the arbitral tribunal retains their general discretion under
section 44(1)(a), as section 44(2) expressly provides that the arbitral tribunal ‘may take the
fact of the offer into account’.
It should also be emphasized that sections 44(2) and (3) may be excluded by express
agreement of the parties.

§44.04 ORDER FOR DELIVERY

Section 44(4) of the Arbitration Act 2005 provides that where the arbitral tribunal refuses
to deliver its award until the payment of its fees and expenses, the High Court may order
the arbitral tribunal to deliver the award on such conditions as it thinks fit. It is unclear
what conditions the High Court may order under this provision. Perhaps, the High Court
may order that the fees and expenses of the arbitral tribunal be deposited with the
relevant arbitral institution or the High Court pending the resolution of any genuine
dispute on such fees and expenses.

§44.05 REVIEW
Section 44(5) of the Arbitration Act 2005 provides that a taxation of costs, fees and
expenses may be reviewed in the same way as a taxation of costs. The meaning and
purpose of this provision are unclear. It is unclear whether the High Court has the authority
pursuant to this section to review the arbitral tribunal’s taxation of costs, fees and
expenses.
The judgment of the Court of Appeal, in SDA Architect supra, and the High Court, in
Magnificient Diagraph supra, suggest that the High Court does not have the authority to
conduct such a review, as costs are at the discretion of the arbitral tribunal.
P 348 Therefore, it is submitted that section 44(5) is intended to cover a limited situation, where
P 349

209
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 P 349
the High Court has taxed costs, expenses or fees under section 44(1)(b) because the
arbitral tribunal has not taxed such costs. In this situation, where the High Court has taxed
costs, such taxation may be reviewed by an appellate court, under section 44(5). This
interpretation also accords with the principle of minimal intervention by the courts.
P 349
P 350

45. Extension of Time for Commencing Arbitration Proceedings

Where an arbitration agreement provides that arbitral proceedings are to be commenced
within the time specified in the agreement, the High Court may, notwithstanding that the
specified time has expired, extend the time for such period and on such terms as it thinks fit, if
it is of the opinion that in the circumstances of the case undue hardship would otherwise be
caused.

§45.01 INTRODUCTION
Section 45 of the Arbitration Act 2005 allows the High Court to extend the time for the
commencement of an arbitration, where the arbitration agreement specifies the time
within which the arbitration is to be commenced.
Section 45 has no equivalent provision in the 1985 Model Law. Section 45 is based on
clause 7 of Schedule 2 of the New Zealand Arbitration Act 1996. Section 45 has also been
recognized as the re-enactment of section 28 of the Arbitration Act 1952, by the Court of
Appeal, in Dancom Telecommunication (M) Sdn Bhd v. UniAsia General Insurance Bhd [2008]
5 CLJ 551 at paragraph 32.
Section 28 of the Arbitration Act 1952 provides:
Power of High Court to extend time for commencing arbitration proceedings
28. Where the terms of an agreement to refer future disputes to arbitration
provide that any claims to which the agreement applies shall be barred unless
notice to appoint an arbitrator is given, or an arbitrator is appointed, or some
other step to commence arbitration proceedings is taken, within a time fixed by
the agreement and a dispute arises to which the agreement applies, the High
Court, if it is of opinion that in the circumstances of the case undue hardship
would otherwise be caused, and notwithstanding that the time so fixed has
expired, may, on such terms, if any, as the justice of the case may require, but
without prejudice to any written law limiting the time for the commencement of
arbitration proceedings, extend the time for such period as it thinks proper.
Section 45 appears in Part III of the Arbitration Act 2005. Therefore, based on section 3(2),
section 45 applies in domestic arbitration unless the parties have agreed to exclude it and
does not apply in international arbitration unless the parties have agreed to include it.

§45.02 UNDUE HARDSHIP

The test under both section 45 of the Arbitration Act 2005 and section 28 of the Arbitration
Act 1952 is whether ‘undue hardship’ would be caused. The authorities on section 28
therefore continue to be applicable to section 45.
The factors to be considered by the courts in assessing ‘undue hardship’ have been
summarized as follows by the High Court, in Penta-Ocean Construction v. Penang
Development Corporation [2003] 2 AMR 311 at pages 326 and 327:
(1) The words ‘undue hardship’ … should not be construed too narrowly.
P 350
P 351
(2) ‘Undue hardship’ means excessive hardship and, where the hardship is
due to the fault of the claimant, it means hardship of the consequences of
which are out of proportion to such fault.
(3) In deciding whether to extend time or not, the court should look at all the
relevant circumstances of the particular case.
(4) In particular, the following matters should be considered:
(a) the length of the delay;
(b) the amount at stake;
(c) whether the delay was due to the fault of the claimant or to
circumstances outside his control;
(d) if it was due to the fault of the claimant, the degree of such fault;
(e) whether the claimant was misled by the other party;
(f) whether the other party has been prejudices by the delay, and, if so,
the degree of such prejudice.
These principles appear to be quite settled, in the light of the earlier judgment of the
Federal Court, in Safety Insurance Company Sdn Bhd v. Chow Soon Tat [1975] 1 MLJ 193 at
page 200, and the subsequent judgment of the Court of Appeal, in Mascom (M) Sdn Bhd &

210
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Ors v. Ken Grouting System Specialist Sdn Bhd [2004] 2 MLJ 163 at paragraphs 33-35.

§45.03 RESTRAINT OF LEGAL PROCEEDINGS

The question arises whether an arbitration agreement which limits the time within which a
party may enforce his rights is void, as being contrary to section 29 of the Contract Act 1950.
Section 29 of the Contract Act 1950 provides:
Agreements in restraint of legal proceedings void
29. Every agreement, by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract, by the usual legal
proceedings in the ordinary tribunals, or which limits the time within which he
may thus enforce his rights, is void to that extent.
Saving of contract to refer to arbitration dispute that may arise
Exception 1 – This section shall not render illegal a contract by which two or
more persons agree that any dispute which may arise between them in respect
of any subject or class of subjects shall be referred to arbitration, and that only
the amount awarded in the arbitration shall be recoverable in respect of the
dispute so referred.
Saving of contract to refer questions that have already arisen
Exception 2 – Nor shall this section render illegal any contract in writing, by
which two or more persons agree to refer to arbitration any question between
them which has already arisen, or affect any law as to references to arbitration.
Exception 3 – Nor shall this section render illegal any contract in writing
between the Government and any person with respect to an award of a
scholarship by the Government wherein it is provided that the discretion
exercised by the Government under that contract shall be final and conclusive
and shall not be questioned by any court.
P 351
P 352
In this exception, the expression ‘scholarship’ includes any bursary to be
awarded or tuition or examination fees to be defrayed by the Government and
the expression ‘Government’ includes the Government of a State.
The Court of Appeal, in Dancom supra at paragraphs 22 and 29, confirmed that arbitration
agreement that limited the time for the commencement of proceedings was not void under
section 29, as arbitral tribunals were not ‘ordinary tribunals’ under section 29, and in the
light of the principle of party autonomy, which applied to arbitration, as well as the
express recognition of the right of the parties, to limit time by section 45:
[22] … A contract which incorporates an arbitration clause, such as cl. 14, to refer
the parties’ dispute to arbitration within a specified period as agreed by the
parties, is a contract sui generis. The hallmark of arbitration is characterised by
the autonomy of the parties. By way of agreement, the parties have an
unfettered choice, not only to refer their dispute to arbitration and to choose
their own arbitrators or umpires, but also to prescribe the time frame for such
reference. Their intention is to sustain the mechanism of alternative dispute
resolution by way of arbitration and not court action. Their desire is to place
arbitration under their exclusive control. They hope to achieve eg, speed in the
hearing and determination of their dispute. Different considerations would then
apply to an arbitration clause prescribing a time frame such as that expressly
agreed in cl. 14. It is a product of the doctrine of freedom of contract and would
attract the application of the specific provisions expressly set out in exceptions
1 and 2 to s. 29, so that the general rule embodied in s. 29 would give way to
these two exceptions.
…
[29] The validity of cl. 14 is given statutory recognition in s. 28 of the Arbitration
Act 1952 (‘s. 28’) which vests the High Court with the power to extend the time for
the purpose of referring a dispute to arbitration after the expiry of the
prescribed 12 month time frame … .

§45.04 UNAMBIGUOUS
The High Court, in Mun Seng Fook v. AIG Malaysia Insurance Bhd [2018] MLJU 310 at
paragraphs 24 and 36, decided that despite provisions in the agreement limiting the time
to commence arbitral proceedings, clear and unambiguous terms were also required to
bar a party from commencing civil proceedings:
[24] The other relevant clauses of the policy are as follows:
Clause 15

211
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 ‘Legal Proceedings
No action in law or equity shall be brought to recover on this policy prior to the
expiration of sixty (60) days after written proof of loss has been filed in
accordance with the requirements of this policy, nor shall such action be
brought at all unless brought within one (1) year from the expiration of the time
within which the written proof or loss is required by the policy.’
Clause 20
P 352
P 353
‘Limitation of Time of Bringing Arbitration
If a claim is made under the policy and is rejected by the CMI, the Insured or
his/her legal personal representatives shall commence arbitration proceedings
in accordance with Clause 19 of Section 7 hereof within six (6) months of such
rejection, failing which CMI shall be discharged from all liability whatsoever for
that claim.’
…
[36] This Court finds that in the policy herein, the Respondent has not made it
clear to the Appellant that in the event there is no referral to arbitration, the
Appellant will lose his rights under Clause 15 of the policy to refer the matter to
the courts. As such, the contra proferentum rule applied in favour of the
Appellant in view of the conflict between Clause 15 and Clause 19 of the policy
and the Appellant is entitled to maintain his action in court. Clause 19 being the
arbitration clause referred to by the Respondent cannot be viewed in isolation
to defeat the Appellant’s claim under the policy.
P 353
P 354

46. Extension of Time for Making Award

(1) Where the time for making an award is limited by the arbitration agreement, the High
Court may, unless otherwise agreed by the parties, extend that time.
(2) An application under subsection (1) may be made –
(a) upon notice to the parties, by the arbitral tribunal; or
(b) upon notice to the arbitral tribunal and the other parties, by any party to the
proceedings.
(3) The High Court shall not make an order unless –
(a) all available tribunal processes for obtaining an extension of time have been
exhausted; and
(b) the High Court is satisfied that substantial injustice would otherwise be done.
(4) The High Court may exercise its powers under subsection (1) notwithstanding that the
time previously fixed by or under the arbitration agreement or by a previous order has
expired.

§46.01 INTRODUCTION
Section 46 of the Arbitration Act 2005 allows the High Court to extend the time to make an
award, where such time is limited by the arbitration agreement.
Section 46 has no equivalent in the 1985 Model Law. Section 46 is based on section 50 of
the English Arbitration Act 1996. Section 50 of the English Arbitration Act 1996 is also the
basis for section 36 of the Singapore Arbitration Act 2001.
Section 46 appears in Part III of the Arbitration Act 2005. Therefore, section 46 applies in
domestic arbitration unless the parties have agreed to exclude it. And, section 46 does not
apply in international arbitration unless the parties have agreed to include it.

§46.02 PARTY AUTONOMY

Section 46(1) of the Arbitration Act 2005 provides that the High Court may extend the time
for the making of the award ‘unless otherwise agreed by the parties’. Therefore, the parties
may agree to exclude the right of the High Court to allow such an extension. Such an
agreement may, in a domestic arbitration, be to exclude Part III of the Arbitration Act 2005
in general or section 46 in particular.
Alternatively, the parties may exclude section 46 by adopting a set of arbitration rules. For
example, Rule 1(1)(c) of the 2018 AIAC Arbitration Rules excludes the application of section
46 of the Arbitration Act 2005 to an arbitration seated in Malaysia.
P 354 The High Court of Singapore, in Ting Kang Cheng John v. Teo Hee Lai Building Constructions
P 355 Pte Ltd [2010] 2 SLR 625 at paragraph 43, when commenting on section 36 of the
Singapore Arbitration Act 2001, suggest that it may be prudent to expressly exclude this
right if the parties so intend.

212
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Section 46(1) preserves the principles of party autonomy insofar as the parties are free to
exclude the power of the High Court to extend time should they so wish. (34)

§46.03 PROCEDURE
Section 46(2) of the Arbitration Act 2005 sets out the procedure for applying for an
extension of time. Either the arbitral tribunal or a party may make the application, with
notice to the other parties. Section 46(4) of the Arbitration Act 2005 clarifies that the High
Court may extend time even if time has expired under the arbitration agreement or a
previous order.

§46.04 DISCRETION AND PRECONDITIONS

Section 46(3) of the Arbitration Act 2005 sets out the two preconditions for an application.
These preconditions are mandatory given the use of the word ‘shall’ in section 46(3). Even if
these mandatory preconditions are satisfied, the High Court retains a discretion whether to
grant the extension, in the light of the word ‘may’ used in section 46(1).
The two mandatory preconditions are that all available tribunal processes for obtaining an
extension have been exhausted and that substantial injustice would otherwise occur.

[A] Tribunal Processes Exhausted

Section 46(3)(a) of the Arbitration Act 2005 provides that all available tribunal processes
for obtaining an extension of time must have been exhausted before an application can be
made to the High Court.
Where the parties have adopted a particular set of arbitration rules, the arbitral tribunal
should exhaust the procedure for an extension under those rules before applying to court
for an extension.
For example, Article 31 of the 2017 ICC Arbitration Rules provides:
Article 31: Time Limit for the Final Award
1) The time limit within which the arbitral tribunal must render its final
award is six months. Such time limit shall start to run from the date of the
last signature by the arbitral tribunal or by the parties of the Terms of
Reference or, in the case of application of Article 23(3), the date of the
notification to the arbitral tribunal by the Secretariat of the approval of
the Terms of Reference by the Court. The Court may fix a different time
limit based upon the procedural timetable established pursuant to Article
24(2).
P 355
P 356
2) The Court may extend the time limit pursuant to a reasoned request from
the arbitral tribunal or on its own initiative if it decides it is necessary to
do so.
Based on these rules, the arbitral tribunal should make a reasoned request to the ICC
International Court of Arbitration for an extension, failing which, an application may be
made to the High Court.
In the absence of any arbitration rules, the arbitral tribunal may still be obliged to seek
the consent of the parties to an extension before applying to the High Court. This was
indicated by the High Court of Singapore, in Ting Kang Chung supra at paragraph 43, when
considering section 36 of the Singapore Arbitration Act 2001.

[B] Substantial Injustice

Section 46(3)(b) of the Arbitration Act 2005 provides that the applicant must satisfy the
High Court that ‘substantial injustice’ will be caused if the extension was not granted.
The High Court of Singapore, in Ting Kang Chung supra at paragraph 43, emphasized that
the applicant must prove on a balance of probabilities that substantial injustice would be
done if time was not extended. This includes balancing any prejudice that the other party
may suffer if time is extended. The court will be entitled to weigh all relevant facts and, in
particular, would consider:
(1) the relative fault of the parties;
(2) the sum at stake; and
(3) the consequences of failure to act.
P 356

References

213
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 1) See the Australian International Arbitration Act 1974, sections 23C to 23G, the Hong Kong
Arbitration Ordinance, sections 16 and 18; New Zealand Arbitration Act 1996, sections
14 to 14I.
2) See §2.03 supra.
3) See Sir David AR Williams and Amokura Kawharu, Williams & Kawharu on Arbitration
(2nd edn, LexisNexis 2017) at para. 13.6.3.
4) See Rules of Court 2012, Order 7 Rule 2(1) and Forms 5 and 6.
5) See New Zealand Arbitration Act 1996, section 14I, which, by way of comparison, does
provide for the anonymization of the judgment and prohibits public access to files in
court.
6) See New Zealand Arbitration Act 1996, section 14H; Williams & Kawharu on Arbitration
supra at para. 13.7.2.
7) See section 42(1) of the Arbitration Act 2005.
8) See section 42(1) of the Arbitration Act 2005.
9) See section 42(1A) of the Arbitration Act 2005.
10) See section 42(2) of the Arbitration Act 2005 and Order 69 Rule 6(1) of the Rules of Court
2012.
11) See section 42(2) of the Arbitration Act 2005 and Order 69 Rule 6(2)(a) of the Rules of
Court 2012.
12) See section 42(2) of the Arbitration Act 2005 and Order 69 Rule 6(2)(b) of the Rules of
Court 2012.
13) See Order 69 Rule 6(2)(c) of the Rules of Court 2012.
14) See Order 69 Rule 6(4) of the Rules of Court 2012.
15) See Sanlaiman Sdn Bhd v. Kerajaan Malaysia [2013] 3 MLJ 755 at para. 47, HC; Lembaga
Kemajuan Ikan Malaysia v. WJ Construction Sdn Bhd [2013] 8 CLJ 655 at para. 49, HC;
Quality Property Development Sdn Bhd v. Xavier Francis & Anor [2014] 1 LNS 67 at paras
24, 30, 33, HC; Kilang Sawit Bell Sdn Bhd v. Kwantas Oil Sdn Bhd [2015] MLJU 1985 at
para. 42, HC; Tan Kong Han v. QDB Ventures Sdn Bhd [2016] 1 LNS 870 at para. 56, HC; Far
East Holdings supra at para. 155, FC.
16) See Sabah Medical Centre supra at para. 31; Sanlaiman supra at para. 5; Sagau Batu
Bala supra at para. 24; MMC Engineering supra at para. 32.
17) See Perwira Bintang supra at para. 52, CA; Magna Prima supra at para. 77, HC; MMC
Engineering supra at para. 40, HC.
18) See Magna Prima supra at paras 78-79, HC; MMC Engineering supra at para. 39, HC;
Konsortium Lord-Sebarkat supra at para. 32, HC; Renoir Consulting supra at paras 71-72,
94, HC.
19) See SDA Architects supra at para. 33, CA.
20) See Chain Cycle supra at para. 65, CA.
21) See Chip Lam Seng Berhad v. R1 International Pte Ltd [2010] MLJU 104 at p 1, HC; Pacific
& Orient Insurance Co Berhad v. Tetuan Kumar Jaspal Quah & Aishah [2015] 1 LNS 501 at
para. 15, HC; Kluang Healthcare supra at para. 47, HC.
22) See Kluang Healthcare supra at para. 47, HC.
23) See Pacific & Orient supra at paras 15-17, HC.
24) See Maimunah Deraman supra at para. 21, HC; Sanlaiman supra at para. 3, HC; Sagau
Batu Bala supra at para. 6, HC; Tan Kong Han supra at para. 35, HC.
25) See also SDA Architects supra at paras 12, 15, CA.
26) See Taman Bandar Baru supra para. 23(d), HC; confirmed in Perwira Bintang supra at
para. 57(b), CA; followed in Maimunah Deraman supra para. 21, HC; Sanlaiman supra
para. 3, HC; Sagau Batu Bala supra para. 16, HC; Tan Kong Han supra para. 35, HC.
27) See Maimunah Deraman supra at para. 21, HC; Sanlaiman supra at para. 3, HC; Sagau
Batu Bala supra at para. 16, HC.
28) See Perwira Bintang supra at paragraphs 55 to 56, CA.
29) See also Lembaga Kemajuan Ikan supra at para. 6, HC; Jamilah Abdul Hamid supra at p.
10, HC; Awangku Dewa supra at paras 22, 28, CA; Zenbay supra para. 44, HC.
30) See SDA Architects supra at para. 49, CA; Zenbay supra para. 57, HC.
31) See Arbitration Act 2005, sections 15(5) and 18(10).
32) See Magnificient Diagraph Sdn Bhd v. JWC Ariatektura Sdn Bhd [2009] MLJU 583 at para.
4(b), HC; and SDA Architects supra at paras 47(f), (h) and (j), CA.
33) See SDA Architect supra at para. 32.
34) See Ting Kang Chung supra at para. 43, HC (Singapore).

214
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Chapter 10: Miscellaneous
Publication 47. Liability of Arbitrator
Arbitration in Malaysia: A An arbitrator shall not be liable for any act or omission in respect of anything done or
Commentary on the omitted to be done in the discharge of his functions as an arbitrator unless the act or
Malaysian Arbitration Act omission is shown to have been in bad faith.

§47.01 INTRODUCTION
Jurisdiction
Section 47 of the Arbitration Act 2005 provides for an arbitrator tribunal’s immunity.
Malaysia Section 47 has no equivalent in the 1985 Model Law. Section 47 is based on section 29 of the
English Arbitration Act 1996.
Bibliographic reference The Court of Appeal, in Asean Bintulu Fertilizer Sdn Bhd v. Wekajaya Sdn Bhd and another
appeal [2017] MLJU 1530, at paragraphs 14 and 16, while recognizing the immunity granted
'Chapter 10: Miscellaneous', by section 47, which is not found in the 1985 Model Law, expressed concern that arbitrators
in Thayananthan Baskaran , were not regulated like other professionals in Malaysia:
Arbitration in Malaysia: A
Commentary on the [14] Basically, section 47 to some extent gives immunity to the arbitrator for
Malaysian Arbitration Act, misconduct. The Model Law does not have a similar provision. Thus, the
(© Kluwer Law International; arbitrator in Malaysia is a protected species and his conduct in arbitration
Kluwer Law International proceedings in a limited sense cannot be challenged unless bad faith can be
2019) pp. 357 - 370 established … .
…
[16] The Model Law concept leans in favour of the arbitrator without provision
for disciplinary tribunal and any form of misconduct during the arbitral process
or failure of the arbitrator to disclose information which may be material
consideration for appointment, etc. may not be strictly within the purview of
the court once the award has been made. Malaysian law also does not have a
disciplinary mechanism for arbitrators coming from the panel of institutional
bodies like KLRCA to check the integrity of arbitration process, the arbitrator as
well as the award. Many professional bodies in Malaysia where there is some
P 357 form of statutory recognition such as for the lawyers or medical practitioners,
P 358 comes with a disciplinary body to keep in check with the conduct and
professionalism of their members to sustain rule of law as well as
administration of justice … Misconduct of arbitrators will generally undermine
the growing arbitration industry as it will compromise administration of justice
and rule of law. Our constitutional framework requires it to be checked by
legislative measures, to uphold the rule of law.

§47.02 PURPOSE OF IMMUNITY

Immunity is granted to an arbitrator:
(1) to ensure the independence of the arbitral tribunal;
(2) to avoid threats to decision-making by the arbitral tribunal; and
(3) to prevent a rehearing which would inevitably follow if the arbitral tribunal were
subject to claims of negligence. (1)
The High Court, in MMC Engineering Group Bhd & Anor v. Wayss & Freytag (M) Sdn Bhd &
Anor [2015 MLJU 477 at paragraph 55, emphasized that an arbitral tribunal’s immunity
arises from their acting in a quasi-judicial capacity:
This general rule stems from the fundamental principle that arbitrators or
arbitral tribunals act in a quasi-judicial capacity to deliberate and determine
the dispute referred. This principle is not altered even though arbitral tribunals
assume mandates and jurisdiction from reference and decisions of the
contracting parties. Insofar as their role in the arbitration is concerned, they are
appointed by the disputing parties to resolve their differences. The parties
have further agreed to be bound by the decision of the arbitrator, regardless
how the decision may pan out to be; in their favour or otherwise.

§47.03 LIMITS OF IMMUNITY

Although the arbitral tribunal has immunity, there are limits to this immunity. There are
two limits on the arbitral tribunal’s immunity, one express and the other implicit. The
express qualification is where the arbitral tribunal has acted in bad faith. Implicitly, the
immunity only applies where the arbitral tribunal has acted or omitted to act in discharge
of their function. These two limitations on the arbitral tribunal’s immunity are considered
below.

215
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 [A] Bad Faith
Section 47 of the Arbitration Act 2005 provides that an arbitral tribunal will be liable where
they have acted or omitted to act in bad faith.
P 358 There are no judgments on the meaning of ‘bad faith’ in this particular context. However, in
P 359 the context of administrative law, the Federal Court, in Karam Singh v. Minister of Home
Affairs, Malaysia [1969] 2 MLJ 129 at pages 138, 141, 144, 157, held that a power was exercised
mala fide or in bad faith where it was exercised for a collateral or ulterior purpose, that is a
purpose other than that provided for in the statute. A power was also exercised mala fide,
where it was exercised in a casual or cavalier fashion, without care, caution and a proper
sense of responsibility, although personal animosity was not required. The question of
whether the power had been exercised in bad faith was essentially one of fact.

[B] Not in Discharge of Functions

Section 47 of the Arbitration Act 2005 will only provide immunity where the arbitral
tribunal has acted or omitted to act in discharge of their function. There will be no
immunity where the arbitral tribunal is not acting in discharge of their functions but in
another capacity.
There will also be no immunity where the arbitral tribunal has not acted at all. In this
circumstance, the arbitral tribunal may be liable under their contract with the parties,
depending on the terms of such contract. (2)

§47.04 NON-DEROGABLE
Section 47 is a non-derogable provision of the Arbitration Act 2005. Nevertheless, the
parties may be entitled to exclude the exceptions on immunity considered in §47.03 supra.
The parties may do this by adopting the rules published by an arbitration centre. For
example, Rule 17 of the 2018 AIAC Arbitration Rules provides:
No Liability
Neither the AIAC nor the arbitral tribunal shall be liable for any act or omission
related to the conduct of the arbitral proceedings.
This rule appears to provide for the unqualified immunity of the arbitral tribunal without
the bad faith exception considered in §47.03[A] supra.
P 359
P 360

48. Immunity of Arbitral Institution

The Director of the Asian International Arbitration Centre (Malaysia) or any other person or
institution designated or requested by the parties to appoint or nominate an arbitrator, shall
not be liable for anything done or omitted in the discharge of the function unless the act or
omission is shown to have been in bad faith.

§48.01 INTRODUCTION
Section 48 of the Arbitration Act 2005 provides for the immunity of arbitral institutions.
Section 48 has no equivalent in the 1985 Model Law. Section 48 is based on section 74(1) of
the English Arbitration Act 1996. The Arbitration Act 2005 did not adopt section 74(2) and (3)
of the English Arbitration Act 1996, which provides:
(1) immunity for the arbitral institution against anything done by an arbitrator
appointed by such institution; and
(2) that the employees and agents of the arbitral institution will also be similarly
immune.
The reasons for the Arbitration Act 2005 not adopting sections 74(2) and (3) of the English
Arbitration Act 1996 are unclear. Perhaps, section 48 was considered to be sufficiently
general to cover the particulars provided for in sections 74(2) and (3) of the English
Arbitration Act 1996. There appears to be no reason in principle for the omission of these
provisions.

§48.02 PURPOSE OF THE IMMUNITY

The purpose of granting this immunity to arbitral institutions is:
(1) arbitral institutions are unlikely to have the funds to meet claims against them;
(2) arbitral institutions are also unlikely to have the funds to take out the necessary
insurance; and
(3) therefore, the absence of immunity may hamper the beneficial work of arbitral
institutions. (3)

§48.03 LIMITS OF IMMUNITY

216
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The immunity provided for in section 48 of the Arbitration Act 2005 is limited in two ways,
which are considered below.
P 360
P 361
[A] Bad Faith
Section 48 of the Arbitration Act 2005 will not grant immunity to the arbitral institution
where they have acted in bad faith.
There are no judgments that define ‘bad faith’ in this context. Reference should be made
to §47.03[A] supra on the meaning of ‘bad faith’.

[B] Discharge of the Function

Section 48 of the Arbitration Act 2005 does not give an arbitral institution immunity except
where they have acted in discharge of their function to appoint or nominate an arbitrator.
The arbitral institution will be liable for all the other functions they perform. The arbitral
institution may also be liable in contract, where they have entirely failed to discharge
their function to appoint or nominate an arbitrator rather than having discharged this
function negligently. (4)

§48.04 NON-DEROGABLE
Although section 48 of the Arbitration Act 2005 appears non-derogable, it is submitted that
the parties would be entitled to extend the immunity granted under this provision.
For example, Rule 17 of the 2018 AIAC Arbitration Rules appears to extend the immunity by
removing the bad faith exception considered under §48.03[A] supra.
P 361
P 362

49. Bankruptcy
(1) Where a party to an arbitration agreement is a bankrupt and the person having
jurisdiction to administer the property of the bankrupt adopts the agreement, the
arbitration agreement shall be enforceable by or against the person.
(2) The High Court may direct any matter in connection with or for the purpose of
bankruptcy proceedings to be referred to arbitration if –
(a) the matter is one to which the arbitration agreement applies;
(b) the arbitration agreement was made by a person who has been adjudged a
bankrupt before the commencement of the bankruptcy proceedings; and
(c) the person having jurisdiction to administer the property does not adopt the
agreement.
(3) An application under subsection (2) may be made by –
(a) any other party to the arbitration agreement; or
(b) any person having jurisdiction to administer the property of the bankrupt.

§49.01 INTRODUCTION
Section 49 of the Arbitration Act 2005 provides for a situation where one of the parties to
the arbitration agreement becomes bankrupt.
There is no equivalent to section 49 in the 1985 Model Law. There is also no equivalent to
this provision in the English Arbitration Act 1996 and the New Zealand Arbitration Act 1996,
on which certain other provisions of the Arbitration Act 2005 are based.
Section 49 of the Arbitration Act 2005 is a re-enactment of section 5 of the Arbitration Act
1952.

§49.02 ADOPTION OF THE ARBITRATION AGREEMENT

Where the person having jurisdiction to administer the property of the bankrupt adopts an
arbitration agreement the bankrupt is party to, the arbitration agreement may be
enforced by or against that person. Therefore, where the arbitration agreement is adopted,
things will continue as usual between the parties.

§49.03 NON-ADOPTION OF THE ARBITRATION AGREEMENT

On the other hand, where the person having jurisdiction to administer the property of the
bankrupt does not adopt the arbitration agreement, the other party to the arbitration
agreement may apply to the High Court for the matter to be referred to arbitration.
P 362 The High Court may refer the matter to arbitration where two preconditions are satisfied:
P 363
(1) the dispute is one to which the arbitration agreement applies; and
(2) the person made the arbitration agreement before he was adjudged bankrupt.

217
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 The High Court has discretion whether to refer the dispute to arbitration, in the light of the
use of the permissive ‘may’ in section 49(2), even if these two preconditions are satisfied.
Section 49(3) of the Arbitration Act 2005 also allows the party who has jurisdiction to
administer the property of the bankrupt to apply to the High Court under section 49(2) to
refer the dispute to arbitration. However, it is unclear why a person would make the
application after declining to adopt the arbitration agreement in the first instance.
P 363
P 364

50. Mode of Application

Any application to the High Court under this Act shall be by an originating summons as
provided in the Rules of the High Court 1980 [P.U.[A]50/1980].

§50.01 INTRODUCTION
Section 50 of the Arbitration Act 2005 provides that any application to the High Court
under the Act shall be by way of originating summons.
There is no equivalent to section 50 in the 1985 Model Law, which generally leaves matters
of procedure to be dealt with by domestic legislation.
Section 31 of the Arbitration Act 1952 provides that:
Rules of court may be made for giving effect to this Act and may confer on the
Registrar of the High Court or any other officer of that Court all or any of the
jurisdiction conferred by this Act on the High Court.
The High Court, in Kembang Serantau Sdn Bhd v. JEKS Engineering Sdn Bhd [2016] 2 CLJ 427 at
paragraphs 39 and 40, emphasized that section 50 of the Arbitration Act 2005 is not the
equivalent of section 31 of the Arbitration Act 1952 and that the extent of court intervention
is now more limited:
[39] … That was actually a decision under the old law relating to arbitration, the
Arbitration Act of 1952; a regime quite different from that under the new
Arbitration Act of 2005. The role of the court and the recourse to court
intervention is substantially different. Under s. 31 of the 1952 Act, rules of court
may be made to deal with the matters governed by the Act. Hence, the
provision of O. 69 of the Rules of the High Court 1980 which deals with
arbitration and arbitration related matters.
[40] Under Act 646, there is no equivalent to s. 31. There is only s. 50 which
provides for the mode of originating motions when seeking any court
intervention. I am conscious of O. 69 of the new Rules of Court 2012; the
presence of which does not make any difference to this reading.
Section 50 of the Arbitration Act 2005 refers to the Rules of the High Court 1980. The Rules
of Court 2012 have since replaced the Rules of the High Court 1980. Section 50 should now
be read as referring to the Rules of Court 2012, in the light of section 76 of the
Interpretation Acts 1948 and 1967.

§50.02 SCOPE
Section 50 of the Arbitration Act 2005 only applies to applications made under and
pursuant to the Act. The provision does not extend to any other actions.
The High Court, in MMC Engineering Group Bhd & Anor v. Wayss & Freytag (M) Sdn Bhd &
Anor [2015 MLJU 477 at paragraph 63, held to this effect and decided that an applicant
P 364 could not combine a civil action against a member of the arbitral tribunal together with an
P 365 application to set aside:
Section 50 provides for matters which fall within or under the Act. It does not
extend to or include personal actions, be it under civil law of contract, tort or
trusts. The Plaintiffs have moved this court under section 37. That section is
clear in that its single purpose is the setting aside of the award. There is no
other remedy or relief that may be sought or granted by the court; unlike for
instance, section 42. Hence, there is simply no right of action under section 37
against any member of the arbitral tribunal, including the 2nd Defendant. That
being the case, the Plaintiffs’ concerns under section 50 are unfounded.

§50.03 HIGH COURT

Section 50 of the Arbitration Act 2005 expressly refers to ‘any application to the High
Court’. However, the Arbitration Act 2005 allows certain applications to be made to the
subordinate courts. For example, an application for stay of proceedings in court under
section 10 may be made to the court in which those proceedings were commenced
regardless of whether such court is a High Court or a subordinate court.
This has been recognized by the High Court, in Uba Urus Bina Asia Sdn Bhd v. Quirk &

218
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Associates Sdn Bhd [2016] 4 CLJ 468 at paragraphs 37-39, where it is suggested that section
50 may be redundant:
[37] Unlike ss. 11, 15, 18, 29, 37, 38, 39, 41, 42, 43, 44, 45, 46 and 50 of the
Arbitration Act 2005, where the word ‘court’ is specifically identified as the ‘High
Court’, the words used in s. 10 is ‘a court’. Arguably, this will include the
Magistrates and Sessions courts as the term ‘court’ is not defined in s. 2 of the
Arbitration Act 2005; but the term ‘High Court’ is. With the amendments to the
financial limits of the subordinate courts, applications for orders under s. 10 can
properly come within the jurisdiction of the subordinate courts.
[38] However, s. 50 of the Arbitration Act which provides that applications to the
High Court under the Act shall be by way of an originating summons; and the
Rules of Court 2012 may need to be relooked at. Given that there is now a
common set of Rules of Court governing procedures in both the High Court and
the subordinate courts, s. 50 may have become redundant while O. 69 of the
new Rules of Court 2012 may need some tweaking.
[39] Order 69 of the old Rules of the High Court 1980 dealt specifically with
arbitration and arbitration related matters. When the new Rules of Court were
enacted in 2012, O. 69 was retained with updates. However, O. 69 envisages
arbitration and matters under the Arbitration Act 2005 to be heard and
disposed of by the High Court – see O. 69 sub-r. 1(2). There is nothing mentioned
of the role of the subordinate courts even though there is a specific provision on
stay at O. 69 r. 10. There is, therefore, a need to also relook at O. 69 to deal with
this slight variance.
It is submitted that section 50 of the Arbitration Act 2005 may need to be amended to refer
more generally to the courts rather than specifically to the High Court.
P 365
P 366

§50.04 RELATIONSHIP BETWEEN ARBITRATION ACT 2005 AND RULES OF

COURT 2012
The relationship between the Arbitration Act 2005 and Order 69 of the Rules of Court 2012,
which provides for the procedure for applications to the courts pursuant to the Act, has
been considered by the courts in several judgments since the Act came into force.
Essentially, three principles have emerged:
(1) the Arbitration Act 2005 will take precedence over Order 69 of the Rules of
Court 2012, which is subsidiary legislation. This was emphasised by the
Federal Court, in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 9
CLJ 1 at paragraph 110:
It must be noted that O. 69 r. 10(3) of the ROC 2012 is a procedural
subsidiary legislation while s. 10(1) of the 2005 Act is a substantive
provision in an Act of Parliament. Therefore O. 69 r. 10(3) of the ROC
2012 can only be interpreted in a manner which is not inconsistent
with the mandatory provisions of s. 10(1) of the 2005 Act. In any event,
O. 69 r. 10(1) of the ROC 2012 provides an option for the court either
to ‘decide that question’; or ‘give direction to enable it to be
decided’; and ‘may order the proceedings to be stayed pending its
decision’. The mandatory provisions of s. 10(1) of the 2005 Act, must
prevail. The matter ought to be stayed pending arbitration if all the
necessary requirements under the section are fulfilled. Again, we find
that the plaintiff’s submission on this point does not hold water and
ought to be disregarded.
(2) a particular interpretation of a provision of the Arbitration Act 2005 may
be reinforced by a rule in Order 69 of the Rules of Court 2012; (5) and
(3) any non-compliance with Order 69 of the Rules of Court 2012 will not be
fatal to an application if it is merely a technicality and has not caused a
substantial miscarriage of justice. If the non-compliance can be covered
by an amendment, this is likely to be allowed. (6)
P 366
P 367

51. Repeal and Savings

(1) The Arbitration Act 1952 [Act 93] and the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards Act 1985 [Act 320] are repealed.
(2) Where the arbitral proceedings were commenced before the coming into operation of
this Act, the law governing the arbitration agreement and the arbitral proceedings shall
be the law which would have applied as if this Act had not been enacted.
(3) Nothing in this Act shall affect any proceedings relating to arbitration which have been
commenced in any court before the coming into operation of this Act.

219
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (4) Any court proceedings relating to arbitration commenced after the commencement of
this Act shall be governed by this Act notwithstanding that such proceedings arose out
of arbitral proceedings commenced before the commencement of this Act.

§51.01 INTRODUCTION
Section 51 of the Arbitration Act 2005 provides for the repeal of the old legislation and
transition to the current Act. There is no equivalent to section 51 in the 1985 Model Law,
which leaves matters of repeal and transition to the domestic legislature.
Section 51 of the Arbitration Act 2005 was amended by the Arbitration (Amendment) Act
2011. Section 51(2) of the Malay text was amended to remove a discrepancy and section
51(4) was inserted. The reasons for these amendments and their effect are considered in
§51.04 infra.

§51.02 REPEAL
Section 51(1) repeals the Arbitration Act 1952 and the Convention on the Recognition and
Enforcement of Foreign Arbitration Awards Act 1985.
The repeal of the Arbitration Act 1952 and the enactment of the Arbitration Act 2005 has
fundamentally changed the ethos of arbitration in Malaysia. The courts recognize this and
have repeatedly emphasized the significant shift that has been made by 2005 Act. (7)
Although the Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Act 1985, which gave effect to the 1958 New York Convention, is repealed by the Arbitration
Act 2005, this is a matter of form rather than substance.
The 1958 New York Convention continues to apply in Malaysia through provisions within the
Arbitration Act 2005 itself, like sections 9, 10, 38 and 39 of the Arbitration Act 2005, which
reflect Articles II-VI of the 1958 New York Convention.
P 367
P 368

§51.03 ARBITRAL PROCEEDINGS

Section 51(2) of the Arbitration Act 2005 provides for two scenarios:
(1) where arbitral proceedings were commenced before the Arbitration Act 2005 came
into force on 15 March 2006, the Arbitration Act 1952 will apply;
(2) where arbitral proceedings were commenced after the Arbitration Act 2005 came into
effect on 15 March 2006, the Arbitration Act 2005 will apply.
The words ‘arbitral proceedings’ are not defined in the Arbitration Act 2005. However, by
reading sections 23 and 34 of the Arbitration Act 2005, together, it would appear that the
arbitral proceedings commence with the request for arbitration and conclude with the
final award or an order for termination by the arbitral tribunal. (8)
Therefore, if the request for arbitration was issued prior to 15 March 2006, the Arbitration
Act 1952 will apply. And, if the request for arbitration is issued after 15 March 2006, the
Arbitration Act 2005 will apply. (9)
The key event is the commencement of the arbitration, which is marked by the date of the
request for arbitration. The date of the arbitration agreement is irrelevant to determining
whether the Arbitration Act 1952 or 2005 applies.
Unfortunately, the original Malay text of section 51(2) had a discrepancy as it provided that
where the arbitration agreement was entered into or the arbitral proceedings were
commenced prior to 15 March 2006, the Arbitration Act 1952 will apply.
A notification in the Gazette dated 21 February 2006 (PU(B)61) pursuant to section 6 of the
National Language Act 1963/67 provides that the authoritative text of the Arbitration Act
2005 is the English text.
Despite this, due to the discrepancy in the Malay text, the High Court, in Putrajaya Holdings
Sdn Bhd v. Digital Green Sdn Bhd [2008] 10 CLJ 437 at paragraphs 46-58, held that because
the arbitration agreement was entered into prior to 15 March 2006, the Arbitration Act 1952
applied.
Fortunately, this judgment was not followed by subsequent judgments of the High Court, in
Total Safe Sdn Bhd v. Tenaga Nasional Berhad & Anor [2009] 1 LNS 420 at page 4 and Taman
Bandar Baru Masai Sdn Bhd v. Dindings Corporations Sdn Bhd [2010] 5 CLJ 83 at paragraphs
8, 11 and 12, which recognize that the English text of the Arbitration Act 2005 is
authoritative and, as a result, the Arbitration Act 2005 will apply if the arbitration was
commenced after 15 March 2006 regardless of when the arbitration agreement was
entered.
P 368 The discrepancy in the Malay text of section 51(2) of the Arbitration Act 2005 was removed
P 369 by the Arbitration (Amendment) Act 2011. The English and Malay text both now provide
that the key event is the date of commencement of the arbitral proceedings.

§51.04 COURT PROCEEDINGS

220
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Sections 51(3) and 51(4) of the Arbitration Act 2005 provide for two scenarios:
(1) where court proceedings were commenced prior to 15 March 2006, the Arbitration Act
1952 will apply; and
(2) where court proceedings are commenced after 15 March 2006, the Arbitration Act
2005 will apply.
Section 51(4) of the Arbitration Act 2005, which provides for the second scenario above, was
introduced by the Arbitration (Amendment) Act 2011.
Prior to the Arbitration (Amendment) Act 2011, there was uncertainty whether the
Arbitration Act 2005 would apply to court proceedings commenced after 15 March 2006
arising from arbitral proceedings that had been commenced prior to 15 March 2006.
The High Court, in Hiap-Taih Welding & Construction Sdn Bhd v. Boustead Pelita Tinjar Sdn
Bhd (formerly known as Loagan Bunut Plantations Sdn Bhd) [2008] MLJU 375 at pages 2-4,
held that the Arbitration Act 1952 would apply to court proceedings commenced after 15
March 2006 arising from arbitral proceeding commenced prior to 15 March 2006.
However, the High Court, in Segamat Parking Services Sdn Bhd v. Majlis Daerah Segamat
Utama & Another Case [2009] 1 CLJ 942 at paragraphs 10 and 11, held that, where court
proceedings were commenced after 15 March 2006, the Arbitration Act 2005 would apply
even if the arbitral proceedings were commenced prior to 15 March 2006. This is because
the savings provisions in section 51(2) are limited to arbitral proceedings and do not
extend to subsequent court proceedings after the conclusion of the arbitral proceedings.
[10] It is thus very clear from the section that an arbitral proceedings is confined
to proceedings exclusively before the arbitrator or arbitral tribunal only. Any
other related proceedings not before the arbitrator or arbitral tribunal are not
arbitral proceedings. It goes without saying that any other proceedings taking
place after a final award is handed down or after the termination of the
proceeding under any one of the circumstances envisaged under s. 34(2) of the
2005 Act is no longer part of the arbitral proceedings.
[11] That being said, the saving clause offered by s. 51 of the 2005 Act operates
only in respect of arbitral proceedings couched in terms as above. Other
related proceedings upon termination of arbitral proceedings are proceedings
relating to arbitration. Such proceedings, including the one presently before
me, shall be governed by the new Act (2005 Act), provided in Part III, under the
headings ‘Additional Provisions Relating to Arbitration’.
P 369
P 370
Subsequently, the judgment in Segamat Parking supra was given statutory recognition by
the introduction of section 51(4) by the Arbitration (Amendment) Act 2011.
The effect of section 51(4) was recognized by the High Court, in M-10 Builders Sdn Bhd v.
Tunas Selatan Consortium Sdn Bhd [2014] 1 LNS 1564 at paragraphs 5 and 8, where it was
held:
[5] Defendant contends otherwise and says section 51(4) applies such that 2005
Act is the applicable law. The court finds this to be the correct interpretation.
This is evident from the clear provisions in section 51(4) that 2005 applies to
‘any court proceedings’ ‘notwithstanding that such proceedings’ (ie, court
proceedings) ‘arose out of arbitral proceedings commenced before the
commencement of this Act’. This would apply to a court proceeding to set aside
an award in arbitration proceedings commenced under 1952 Act as in this
instant case.
…
[8] It is therefore clear section 51(2) deals with arbitral proceedings and not
court proceedings. All that it provides is where arbitral proceedings were
commenced before the coming into operation of 2005 Act the law applicable to
the arbitration agreement and the arbitral proceedings would be the 1952 Act. It
is section 51(4) that deals specifically with court proceedings relating to
arbitration and where it is a court proceeding arising out of arbitral
proceedings commencing before Act 2005, Act 2005 is to apply.
Therefore, it is now clear that any court proceedings commenced will be governed by the
Arbitration Act 2005 regardless of when the arbitral proceedings commenced.
P 370

References
1) See Robert Merkin and Louis Flannery, Arbitration Act 1996 (4th edn, Informa 2008) at p
75.

221
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 2) See Arbitration Act 1996 supra at p 75.
3) See Robert Merkin and Louis Flannery, Arbitration Act 1996 (4th edn, Informa 2008) at p
179.
4) See Arbitration Act 1996 supra at p 179.
5) See CTI Group Inc v. International Bulk Carriers SpA [2017] MLJU 1194 at para. 66, FC;
Zenbay Sdn Bhd v. Yong Choo Kui Shipyard Sdn Bhd [2015[10 CLJ 924 at para. 47, HC;
Pacific & Orient Insurance Co Berhad v. Tetuan Jaspal Quah & Aishah [2015] 1 LNS 501 at
para. 16; Magna Prima Construction Sdn Bhd v. Bina MBK Sdn Bhd and another case [2015]
MLJU 291 at paras 81-82, HC; SDA Architects v. Metro Millennium Sdn Bhd [2014] 3 CLJ 632
at para. 47(f), CA.
6) See Armada (Singapore) Pte Ltd v. Ashapura Minechem Ltd [2016] 9 CLJ 709 at para. 21, HC;
Zenbay supra at para 47, HC.
7) See Far East Holdings Berhad & Ors v. Majlis Ugama Islam dan Adat Resam Melayu
Pahang [2017] 8 AMR 313 at paras 93, 100, 108 and 109, FC.
8) See Segamat Parking Services Sdn Bhd v. Majlis Daerah Segamat Utama & Another Case
[2009] 1 CLJ 942 at para. 10, HC.
9) See Renault SA v. Inokom Corporation Sdn Bhd & Anor and Other Applications [2010] 5 CLJ
32 at para. 21, CA; Majlis Ugama Islam dan Adat Resam Melayu Pahang v. Far East
Holdings Bhd & Anor [2007] 10 CLJ 318 at paras 20-21, HC.

222
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Appendix
Publication ARBITRATION ACT 2005
Arbitration in Malaysia: A An Act to reform the law relating to domestic arbitration, provide for international
Commentary on the arbitration, the recognition and enforcement of awards and for related matters.
Malaysian Arbitration Act ENACTED by the Parliament of Malaysia as follows:
Part I
Jurisdiction PRELIMINARY
Malaysia 1. Short title and commencement
(1) This Act may be cited as the Arbitration Act 2005.
(2) This Act comes into operation on a date to be appointed by the Minister by
Bibliographic reference notification in the Gazette.
'Appendix', in Thayananthan 2. Interpretation
Baskaran , Arbitration in
Malaysia: A Commentary on (1) In this Act, unless the context otherwise requires –
the Malaysian Arbitration ‘award’ means a decision of the arbitral tribunal on the substance of the dispute and
Act, (© Kluwer Law includes any final, interim or partial award and any award on costs or interest but
International; Kluwer Law does not include interlocutory orders;
International 2019) pp. 371 - ‘High Court’ means the High Court in Malaya and the High Court in Sabah and Sarawak
398 or either of them, as the case may require;
‘Minister’ means the Minister charged with the responsibility for arbitration;
‘State’ means a sovereign State and not a component state of Malaysia, unless
otherwise specified;
‘presiding arbitrator’ means the arbitrator designated in the arbitration agreement
as the presiding arbitrator or chairman of the arbitral tribunal, a single arbitrator or
the third arbitrator appointed under subsection 13(3);
‘arbitration agreement’ means an arbitration agreement as defined in section 9;
P 371
P 372
‘party’ means a party to an arbitration agreement or, in any case where an arbitration
does not involve all the parties to the arbitration agreement, means a party to the
arbitration;
‘seat of arbitration’ means the place where the arbitration is based as determined in
accordance with section 22;
‘international arbitration’ means an arbitration where –
(a) one of the parties to an arbitration agreement, at the time of the conclusion of
that agreement, has its place of business in any State other than Malaysia;
(b) one of the following is situated in any State other than Malaysia in which the
parties have their places of business:
(i) the seat of arbitration if determined in, or pursuant to, the arbitration
agreement;
(ii) any place where a substantial part of the obligations of any commercial or
other relationship is to be performed or the place with which the subject-
matter of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration
agreement relates to more than one State;
‘domestic arbitration’ means any arbitration which is not an international
arbitration;
‘arbitral tribunal’ means an emergency arbitrator, a sole arbitrator or a panel of
arbitrators.
(2) For the purposes of this Act –
(a) in the definition of ‘international arbitration’ –
(i) where a party has more than one place of business, reference to the place
of business is that which has the closest relationship to the arbitration
agreement; or
(ii) where a party does not have a place of business, reference to the place of
business is that party’s habitual residence;
(b) where a provision of this Act, except section 3, leaves the parties free to
determine a certain issue, such freedom shall include the right of the parties to
authorize a third party, including an institution, to determine that issue;
(c) where a provision of this Act refers to the fact that the parties have agreed or
that they may agree or in any other way refers to an agreement of the parties,
that agreement shall include any arbitration rules referred to in that

223
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 agreement;
(d) where a provision of this Act refers to a claim, other than in paragraphs 27(a)
and 34(2)(a), it shall also apply to a counterclaim, and where it refers to a
defence, it shall also apply to a defence to that counterclaim.
P 372
P 373
3. Application to arbitrations and awards in Malaysia
(1) This Act shall apply throughout Malaysia.
(2) In respect of a domestic arbitration, where the seat of arbitration is in Malaysia –
(a) Parts I, II and IV of this Act shall apply; and
(b) Part III of this Act shall apply unless the parties agree otherwise in writing.
(3) In respect of an international arbitration, where the seat of arbitration is in Malaysia
–
(a) Parts I, II and IV of this Act shall apply; and
(b) Part III of this Act shall not apply unless the parties agree otherwise in writing.
(4) For the purposes of paragraphs (2)(b) and (3)(b), the parties to a domestic arbitration
may agree to exclude the application of Part III of this Act and the parties to an
international arbitration may agree to apply Part III of this Act, in whole or in part.
3A. Representation
Unless otherwise agreed by the parties, a party to arbitral proceedings may be
represented in the proceedings by any representative appointed by the party.
4. Arbitrability of subject matter
(1) Any dispute which the parties have agreed to submit to arbitration under an
arbitration agreement may be determined by arbitration unless the arbitration
agreement is contrary to public policy or the subject matter of the dispute is not
capable of settlement by arbitration under the laws of Malaysia.
(2) The fact that any written law confers jurisdiction in respect of any matter on any court
of law but does not refer to the determination of that matter by arbitration shall not,
by itself, indicate that a dispute about that matter is not capable of determination
by arbitration.
5. Government to be bound
This Act shall apply to any arbitration to which the Federal Government or the Government
of any component state of Malaysia is a party.
P 373
P 374
Part II
ARBITRATION
Chapter 1 General Provisions
6. Receipt of written communications
(1) Unless otherwise agreed by the parties –
(a) a written communication is deemed to have been received if it is delivered to
the addressee personally or if it is delivered at his place of business, habitual
residence or mailing address; and
(b) where the places referred to in paragraph (a) cannot be found after making a
reasonable inquiry, a written communication is deemed to have been received
if it is sent to the addressee’s last known place of business, habitual residence
or mailing address by registered post or any other means which provides a
record of the attempt to deliver it.
(2) Unless otherwise agreed by the parties, a written communication sent electronically
is deemed to have been received if it is sent to the electronic mailing address of the
addressee.
(3) The communication is deemed to have been received on the day it is so delivered.
(4) This section shall not apply to any communications in respect of court proceedings.
7. Waiver of right to object
A party who knows –
(a) of any provision of this Act from which the parties may derogate; or
(b) that any requirement under the arbitration agreement has not been complied with,
and yet proceeds with the arbitration without stating its objection to such non-
compliance without undue delay or, if a time limit is provided for stating that
objection, within that period of time, shall be deemed to have waived its right to
object.
8. Extent of court intervention

224
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 No court shall intervene in matters governed by this Act, except where so provided in this
Act.
P 374
P 375
Chapter 2: Arbitration Agreement
9. Definition and form of arbitration agreement
(1) In this Act, ‘arbitration agreement’ means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may arise between
them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in an agreement
or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing -
(a) if its content is recorded in any form, whether or not the arbitration agreement
or contract has been concluded orally, by conduct, or by other means; or
(b) if it is contained in an exchange of statement of claim and defence in which the
existence of an agreement is alleged by one party and not denied by the other.
(4A) The requirement that an arbitration agreement be in writing is met by any electronic
communication that the parties make by means of data message if the information
contained therein is accessible so as to be useable for subsequent reference.
(5) A reference in an agreement to a document containing an arbitration clause shall
constitute an arbitration agreement, provided that the agreement is in writing and
the reference is such as to make that clause part of the agreement.
(6) For the purpose of this section, ‘data message’ means information generated, sent,
received or stored by electronic, magnetic, optical or similar means, including, but
not limited to, electronic data interchange, electronic mail, telegram, telex or
telecopy.
10. Arbitration agreement and substantive claim before court
(1)A court before which proceedings are brought in respect of a matter which is the
subject of an arbitration agreement shall, where a party makes an application before
taking any other steps in the proceedings, stay those proceedings and refer the
parties to arbitration unless it finds that the agreement is null and void, inoperative
or incapable of being performed.
(2) The court, in granting a stay of proceedings pursuant to subsection (1), may impose
any conditions as it deems fit.
(2A) Where admiralty proceedings are stayed pursuant to subsection (1), the court
P 375 granting the stay may, if in those proceedings property has been arrested or bail or
P 376 other security has been given to prevent or obtain release from arrest—
(a) order that the property arrested be retained as security for the satisfaction of
any award given in the arbitration in respect of that dispute; or
(b) order that the stay of those proceedings be conditional on the provision of
equivalent security for the satisfaction of any such award.
(2B) Subject to any rules of court and to any necessary modifications, the same law and
practice shall apply in relation to property retained in pursuance of an order under
subsection (2A) as would apply if it were held for the purpose of proceedings in the
court making the order.
(2C) For the purpose of this section, admiralty proceedings refer to admiralty proceedings
under Order 70 of the Rules of the High Court 1980 [P.U. (A) 50/1980] and proceedings
commenced pursuant to paragraph 24(b) of the Courts of Judicature Act 1964.
(3) Where the proceedings referred to in subsection (1) have been brought, arbitral
proceedings may be commenced or continued, and an award may be made, while the
issue is pending before the court.
(4) This section shall also apply in respect of an international arbitration, where the seat
of arbitration is not in Malaysia.
11. Arbitration agreement and interim measures by High Court
(1) A party may, before or during arbitral proceedings, apply to a High Court for any
interim measure and the High Court may make the following orders for the party to –
(a) maintain or restore the status quo pending the determination of the dispute;
(b) take action that would prevent or refrain from taking action that is likely to
cause current or imminent harm or prejudice to the arbitral process;
(c) provide a means of preserving assets out of which a subsequent award may be
satisfied, whether by way of arrest of property or bail or other security pursuant
to the admiralty jurisdiction of the High Court;
(d) preserve evidence that may be relevant and material to the resolution of the
dispute; or
(e) provide security for the costs of the dispute.

225
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (2) Where a party applies to the High Court for any interim measure and an arbitral
tribunal has already ruled on any matter which is relevant to the application, the
High Court shall treat any findings of fact made in the course of such ruling by the
arbitral tribunal as conclusive for the purposes of the application.
(3) This section shall also apply in respect of an international arbitration, where the seat
of arbitration is not in Malaysia.
P 376
P 377
Chapter 3: Composition of Arbitrators
12. Number of arbitrators
(1) The parties are free to determine the number of arbitrators.
(2) Where the parties fail to determine the number of arbitrators, the arbitral tribunal
shall –
(a) in the case of an international arbitration, consist of three arbitrators; and
(b) in the case of a domestic arbitration, consist of a single arbitrator.
13. Appointment of arbitrators
(1) Unless otherwise agreed by the parties, no person shall be precluded by reason of
nationality from acting as an arbitrator.
(2) The parties are free to agree on a procedure for appointing the arbitrator or the
presiding arbitrator.
(3) Where the parties fail to agree on the procedure referred to in subsection (2), and the
arbitration consists of three arbitrators, each party shall appoint one arbitrator, and
the two appointed arbitrators shall appoint the third arbitrator as the presiding
arbitrator.
(4) Where subsection (3) applies and –
(a) a party fails to appoint an arbitrator within thirty days of receipt of a request in
writing to do so from the other party; or
(b) the two arbitrators fail to agree on the third arbitrator within thirty days of their
appointment or such extended period as the parties may agree,
either party may apply to the Director of the Asian International Arbitration
Centre (Malaysia) for such appointment.
(5) Where in an arbitration with a single arbitrator –
(a) the parties fail to agree on the procedure referred to in subsection (2); and
(b) the parties fail to agree on the arbitrator,
either party may apply to the Director of the Asian International Arbitration
Centre (Malaysia) for the appointment of an arbitrator.
(6) Where, the parties have agreed on the procedure for appointment of the arbitrator –
(a) a party fails to act as required under such procedure;
(b) the parties, or two arbitrators, are unable to reach an agreement under such
procedure; or
(c) a third party, including an institution, fails to perform any function entrusted to
it under such procedure,
any party may request the Director of the Asian International Arbitration Centre
(Malaysia) to take the necessary measures, unless the agreement on the
appointment procedure provides other means for securing the appointment.
P 377 (7) Where the Director of the Asian International Arbitration Centre (Malaysia) is unable
P 378 to act or fails to act under subsections (4), (5) and (6) within thirty days from the
request, any party may apply to the High Court for such appointment.
(8) In appointing an arbitrator the Director of the Asian International Arbitration Centre
(Malaysia) or the High Court, as the case may be, shall have due regard to –
(a) any qualifications required of the arbitrator by the agreement of the parties;
(b) other considerations that are likely to secure the appointment of an
independent and impartial arbitrator; and
(c) in the case of an international arbitration, the advisability of appointing an
arbitrator of a nationality other than those of the parties.
(9) No appeal shall lie against any decision of the Director of the Asian International
Arbitration Centre (Malaysia) or the High Court under this section.
14. Grounds for challenge
(1) A person who is approached in connection with that person’s possible appointment
as an arbitrator shall disclose any circumstances likely to give rise to justifiable
doubts as to that person’s impartiality or independence.
(2) An arbitrator shall, without delay, from the time of appointment and throughout the
arbitral proceedings, disclose any circumstances referred to in subsection (1) to the
parties unless the parties have already been informed of such circumstances by the

226
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitrator.
(3) An arbitrator may be challenged only if –
(a) the circumstances give rise to justifiable doubts as to that arbitrator’s
impartiality or independence; or
(b) that arbitrator does not possess qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by that party, or in whose
appointment that party has participated, only for reasons which that party becomes
aware of after the appointment has been made.
15. Challenge procedure
(1) Unless otherwise agreed by the parties, any party who intends to challenge an
arbitrator shall, within fifteen days after becoming aware of the constitution of the
arbitral tribunal or of any reasons referred to in subsection 14(3), send a written
statement of the reasons for the challenge to the arbitral tribunal.
(2) Unless the challenged arbitrator withdraws from office or the other party agrees to
the challenge, the arbitral tribunal shall make a decision on the challenge.
(3) Where a challenge is not successful, the challenging party may, within thirty days
after having received notice of the decision rejecting the challenge, apply to the High
Court to make a decision on the challenge.
P 378
P 379
(4) While such an application is pending, the arbitral tribunal, including the challenged
arbitrator, may continue the arbitral proceedings and make an award.
(5) No appeal shall lie against the decision of the High Court under subsection (3).
16. Failure or impossibility to act
(1) Where an arbitrator becomes in law or in fact unable to perform the functions of that
office, or for other reasons fails to act without undue delay, that arbitrator’s mandate
terminates on withdrawal from office or if the parties agree on the termination.
(2) Where any party disagrees on the termination of the mandate of the arbitrator, any
party may apply to the High Court to decide on such termination and no appeal shall
lie against the decision of the High Court.
(3) Where, under this section or subsection 15(2), an arbitrator withdraws from office or a
party agrees to the termination of the mandate of an arbitrator, it shall not imply
acceptance of the validity of any ground referred to in this section or subsection
14(3).
17. Appointment of substitute arbitrator
(1) A substitute arbitrator shall be appointed in accordance with the provisions of this
Act where –
(a) the mandate of an arbitrator terminates under section 15 or 16;
(b) an arbitrator withdraws from office for any other reason;
(c) the mandate of the arbitrator is revoked by agreement of the parties; or
(d) in any other case of termination of mandate.
(2) Unless otherwise agreed by the parties –
(a) where a single or the presiding arbitrator is replaced, any hearings previously
held shall be repeated before the substitute arbitrator; or
(b) where an arbitrator other than a single or the presiding arbitrator is replaced,
any hearings previously held may be repeated at the discretion of the arbitral
tribunal.
(3) Unless otherwise agreed by the parties, any order or ruling of the arbitral tribunal
made prior to the replacement of an arbitrator under this section shall not be invalid
solely on the ground there has been a change in the composition of the arbitral
tribunal.
P 379
P 380
Chapter 4: Jurisdiction of the Arbitral Tribunal
18. Competence of arbitral tribunal to rule on its jurisdiction
(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with
respect to the existence or validity of the arbitration agreement.
(2) For the purposes of subsection (1)—
(a) an arbitration clause which forms part of an agreement shall be treated as an
agreement independent of the other terms of the agreement; and
(b) a decision by the arbitral tribunal that the agreement is null and void shall not
ipso jure entail the invalidity of the arbitration clause.
(3) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later
than the submission of the statement of defence.

227
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (4) A party is not precluded from raising a plea under subsection (3) by reason of that
party having appointed or participated in the appointment of the arbitrator.
(5) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised
as soon as the matter alleged to be beyond the scope of its authority is raised during
the arbitral proceedings.
(6) Notwithstanding subsections (3) and (5), the arbitral tribunal may admit such plea if
it considers the delay justified.
(7) The arbitral tribunal may rule on a plea referred to in subsection (3) or (5), either as a
preliminary question or in an award on the merits.
(8) Where the arbitral tribunal rules on such a plea as a preliminary question that it has
jurisdiction, any party may, within thirty days after having received notice of that
ruling appeal to the High Court to decide the matter.
(9) While an appeal is pending, the arbitral tribunal may continue the arbitral
proceedings and make an award.
(10) No appeal shall lie against the decision of the High Court under subsection (8).
19. Power of arbitral tribunal to order interim measures
(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a
party, grant interim measures.
(2) An interim measure is any temporary measure, whether in the form of an award or in
another form, by which, at any time prior to the issuance of the award by which the
dispute is finally decided, the arbitral tribunal orders a party to –
(a) maintain or restore the status quo pending the determination of the dispute;
(b) take action that would prevent or refrain from taking action that is likely to
cause current or imminent harm or prejudice to the arbitral process itself;
P 380
P 381
(c) provide a means of preserving assets out of which a subsequent award may be
satisfied;
(d) preserve evidence that may be relevant and material to the resolution of the
dispute; or
(e) provide security for the costs of the dispute.
19A. Conditions for granting interim measures
(1) The party requesting for the interim measures order under paragraphs 19(2)(a), (b) or
(c) shall satisfy the arbitral tribunal that –
(a) harm not adequately reparable by an award of damages is likely to result if the
measure is not ordered, and such harm substantially outweighs the harm that is
likely to result to the party against whom the measure is directed if the
measure is granted; and
(b) there is a reasonable possibility that the requesting party will succeed on the
merits of the claim.
(2) The determination on the reasonable possibility referred to in paragraph (1)(b) shall
not affect the discretion of the arbitral tribunal in making any subsequent
determination relating to the dispute.
(3) In respect of the request for an interim measure order under paragraph 19(2)(d), the
conditions in subsections (1) and (2) shall apply only to the extent the arbitral
tribunal considers appropriate.
19B. Application for preliminary orders and conditions for granting preliminary orders
(1) Unless otherwise agreed by the parties, a party may, without notice to any other
party, make a request for an interim measure together with an application for a
preliminary order directing a party not to frustrate the purpose of the interim
measure requested.
(2) The arbitral tribunal may grant a preliminary order provided that the arbitral
tribunal considers that prior disclosure of the request for the interim measure to the
party against whom the measure is directed risks frustrating the purpose of the
interim measure.
(3) The conditions specified in section 19A shall apply to any preliminary order provided
that the harm to be assessed under paragraph 19A(1)(a) is the harm that is likely to
result from the order being granted or not.
19C. Specific regime for preliminary orders
(1) Immediately after the arbitral tribunal has made a determination in respect of an
application for a preliminary order, the arbitral tribunal shall –
P 381 (a) give notice to all parties of the request for the interim measure, the application
P 382 for the preliminary order, the preliminary order, if any, and all other
communications, including by indicating the content of any oral
communication, between any party and the arbitral tribunal in relation thereto;
and

228
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) give an opportunity to any party against whom a preliminary order is directed
to present its case at the earliest practicable time.
(2) The arbitral tribunal shall decide immediately on any objection to the preliminary
order.
(3) A preliminary order shall expire after twenty days from the date on which the order
was issued by the arbitral tribunal.
(4) Notwithstanding subsection (3), the arbitral tribunal may issue an interim measure
which adopts or modifies the preliminary order, after the party against whom the
preliminary order is directed has been given notice and an opportunity to present his
case.
(5) A preliminary order shall be binding on the parties but shall not be subject to any
enforcement by the High Court.
(6) The preliminary order referred to in subsection (5) shall not constitute an award.
19D. Modification, suspension or termination
The arbitral tribunal may modify, suspend or terminate an interim measure it has granted,
upon an application of any party or, in exceptional circumstances and upon prior notice to
the parties, on the arbitral tribunal’s own initiative.
19E. Provision of security
(1) The arbitral tribunal may require the party requesting an interim measure to provide
appropriate security in connection with the measure.
(2) The arbitral tribunal shall require the party applying for a preliminary order to
provide security in connection with the order unless the arbitral tribunal considers it
inappropriate or unnecessary to do so.
19F. Disclosure
(1) The arbitral tribunal may require any party to immediately disclose any material
change in the circumstances on the basis of which the interim measure or preliminary
order was requested or applied or granted.
(2) The party applying for a preliminary order shall disclose to the arbitral tribunal all
the circumstances that are likely to be relevant to the arbitral tribunal’s
determination on whether to grant or maintain the order and such obligation shall
continue until the party against whom the order has been requested has had an
opportunity to present its case.
P 382
P 383
19G. Costs and damages
(1) The party requesting for an interim measure or applying for a preliminary order shall
be liable for any costs and damages caused by the interim measure or the
preliminary order to any party if the arbitral tribunal later determines that, in the
circumstances, the interim measure or the preliminary order should not have been
granted.
(2) The arbitral tribunal may award such costs and damages referred to in subsection (1)
at any point during the proceedings.
19H. Recognition and enforcement
(1) Subject to the provisions of section 19I, an interim measure issued by an arbitral
tribunal shall be recognized as binding and, unless otherwise provided by the
arbitral tribunal, enforced upon application to the competent court, irrespective of
the country in which it was issued.
(2) The party who is seeking or has obtained recognition or enforcement of an interim
measure shall immediately inform the court of any termination, suspension or
modification of that interim measure.
(3) The court where recognition or enforcement is sought may, if it considers it proper,
order the requesting party to provide appropriate security if the arbitral tribunal has
not already made a determination with respect to security or where such a decision
is necessary to protect the rights of third parties.
19I. Grounds for refusing recognition or enforcement
(1) Recognition or enforcement of an interim measure may be refused only –
(a) at the request of the party against whom it is invoked if the High Court is
satisfied that –
(i) such refusal is warranted on the grounds set forth in subparagraph 39(1)(a)
(i), (ii), (iii), (iv), (v) or (vi);
(ii) the arbitral tribunal’s decision with respect to the provision of security in
connection with the interim measure issued by the arbitral tribunal has
not been complied with; or
(iii) the interim measure has been terminated or suspended by the arbitral
tribunal or, where so empowered, by the court of the State in which the

229
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 arbitration takes place or under the law of which that interim measure was
granted; or
(b) if the High Court finds that –
(i) the interim measure is incompatible with the powers conferred upon the
Court, but the Court may decide to reformulate the interim measure to the
extent necessary, without modifying its substance, to adapt it to the
Court’s powers and procedures for the purposes of enforcing that interim
measure; or
P 383
P 384
(ii) any grounds set forth in subparagraph 39(1)(b)(i) or (ii) apply to the
recognition and enforcement of the interim measure.
(2) Any determination made by the High Court on any of the grounds in subsection (1)
shall be effective only for the purposes of the application to recognize or enforce the
interim measure.
(3) The High Court where recognition or enforcement is sought shall not, in making any
determination on any of the grounds in subsection (1), undertake a review of the
substance of the interim measure.
19J. Court-ordered interim measures
(1) The High Court has the power to issue an interim measure in relation to arbitration
proceedings, irrespective of whether the seat of arbitration is in Malaysia.
(2) The High Court shall exercise the power referred to in subsection (1) in accordance
with its own procedures in consideration of the specific features of international
arbitration.
(3) Where a party applies to the High Court for any interim measure and an arbitral
tribunal has already ruled on any matter which is relevant to the application, the
High Court shall treat any findings of fact made in the course of such ruling by the
arbitral tribunal as conclusive for the purposes of the application.
Chapter 5: Conduct of Arbitral Proceedings
20. Equal treatment of parties
The parties shall be treated with equality and each party shall be given a fair and
reasonable opportunity of presenting that party’s case.
21. Determination of rules of procedure
(1) Subject to the provisions of this Act, the parties are free to agree on the procedure to
be followed by the arbitral tribunal in conducting the proceedings.
(2) Where the parties fail to agree under subsection (1), the arbitral tribunal may, subject
to the provisions of this Act, conduct the arbitration in such manner as it considers
appropriate.
(3) The power conferred upon the arbitral tribunal under subsection (2) shall include the
power to –
(a) determine the admissibility, relevance, materiality and weight of any evidence;
(b) draw on its own knowledge and expertise;
(c) order the provision of further particulars in a statement of claim or statement of
defence;
P 384
P 385
(d) order the giving of security for costs;
(e) fix and amend time limits within which various steps in the arbitral proceedings
must be completed;
(f) order the discovery and production of documents or materials within the
possession or power of a party;
(g) order the interrogatories to be answered;
(h) order that any evidence be given on oath or affirmation; and
(i) make such other orders as the arbitral tribunal considers appropriate.
22. Seat of arbitration
(1) The parties are free to agree on the seat of arbitration.
(2) Where the parties fail to agree under subsection (1), the seat of arbitration shall be
determined by the arbitral tribunal having regard to the circumstances of the case,
including the convenience of the parties.
(3) Notwithstanding subsections (1) and (2), the arbitral tribunal may, unless otherwise
agreed by the parties, meet at any place it considers appropriate for consultation
among its members, for hearing witnesses, experts or the parties, or for inspection of
goods, other property or documents.
23. Commencement of arbitral proceedings
Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular

230
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 dispute shall commence on the date on which a request in writing for that dispute to be
referred to arbitration is received by the respondent.
24. Language
(1) The parties are free to agree on the language to be used in the arbitral proceedings.
(2) Where the parties fail to agree under subsection (1), the arbitral tribunal shall
determine the language to be used in the arbitral proceedings.
(3) The agreement or the determination referred to in subsections (1) and (2)
respectively shall, unless otherwise specified in the agreement or determination,
apply to any written statement made by a party, any hearing and any award, decision
or other communication by the arbitral tribunal.
(4) The arbitral tribunal may order that any documentary evidence shall be
accompanied by a translation into the language agreed upon by the parties or
determined by the arbitral tribunal.
25. Statements of claim and defence
P 385 (1) Within the period of time agreed by the parties or, failing such agreement, as
P 386 determined by the arbitral tribunal, the claimant shall state –
(a) the facts supporting his claim;
(b) the points at issue; and
(c) the relief or remedy sought,
and the respondent shall state his defence in respect of the particulars set out
in this subsection, unless the parties have otherwise agreed to the required
elements of such statements.
(2) The parties may –
(a) submit with their statements any document the parties consider relevant; or
(b) add a reference to the documents or other evidence that the parties may
submit.
(3) Unless otherwise agreed by the parties, either party may amend or supplement the
claim or defence during the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow such amendment having regard to the
delay in making it.
26. Hearings
(1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to
hold oral hearings for the presentation of evidence or oral arguments, or whether the
proceedings shall be conducted on the basis of documents and other materials.
(2) Unless the parties have agreed that no hearings shall be held, the arbitral tribunal
shall upon the application of any party hold oral hearings at an appropriate stage of
the proceedings.
(3) The parties shall be given reasonable prior notice of any hearing and of any meeting
of the arbitral tribunal for the purposes of inspection of goods, other property or
documents.
(4) All statements, documents or other information supplied to the arbitral tribunal by
one party shall be communicated to the other party.
(5) Any expert report or evidentiary document on which the arbitral tribunal may rely in
making its decision shall be communicated to the parties.
27. Default of a party
Unless otherwise agreed by the parties, if without showing sufficient cause –
(a) the claimant fails to communicate the statement of claim in accordance with
subsection 25(1), the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate the statement of defence in accordance with
subsection 25(1), the arbitral tribunal shall continue the proceedings without treating
such failure in itself as an admission of the claimant’s allegations;
P 386
P 387
(c) any party fails to appear at a hearing or to produce documentary evidence, the
arbitral tribunal may continue the proceedings and make the award on the evidence
before it; or
(d) the claimant fails to proceed with the claim, the arbitral tribunal may make an award
dismissing the claim or give directions, with or without conditions, for the speedy
determination of the claim.
28. Expert appointed by arbitral tribunal
(1) Unless otherwise agreed by the parties, the arbitral tribunal may –
(a) appoint one or more experts to report to it on specific issues to be determined
by the arbitral tribunal; or
(b) require a party to give the expert any relevant information or to produce or to

231
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 provide access to any relevant documents, goods or other property for the
expert’s inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral
tribunal considers it necessary, the expert shall, after delivery of a written or oral
report, participate in a hearing where the parties have the opportunity to put
questions to the expert and to present other expert witnesses in order to testify on
the points at issue.
29. Court assistance in taking evidence
(1) Any party may with the approval of the arbitral tribunal, apply to the High Court for
assistance in taking evidence.
(2) The High Court may order the attendance of a witness to give evidence or, where
applicable, produce documents on oath or affirmation before an officer of the High
Court or any other person, including the arbitral tribunal.
Chapter 6: Making of Award and Termination of Proceedings
30. Law applicable to substance of dispute
(1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as
are chosen by the parties as applicable to the substance of the dispute.
(2) [this subsection has been deleted]
(3) Any designation of the law or legal system of a given State shall be construed, unless
otherwise expressed, as directly referring to the substantive law of that State and not
to its conflict of laws rules.
(4) Failing any designation by the parties, the arbitral tribunal shall apply the law
determined by the conflict of laws rules which it considers applicable.
(4A) The arbitral tribunal shall decide according to equity and conscience only if the
parties have expressly authorized it to do so.
P 387
P 388
(5) The arbitral tribunal shall, in all cases, decide in accordance with the terms of the
agreement and shall take into account the usages of the trade applicable to the
transaction.
31. Decision making by panel of arbitrators
(1) Unless otherwise agreed by the parties, in any arbitral proceedings with more than
one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all
its members.
(2) Where so authorized by the parties or by all the members of the arbitral tribunal,
questions of procedure may be decided by the presiding arbitrator.
32. Settlement
(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal
shall terminate the proceedings and, if requested by the parties and not objected to
by the arbitral tribunal, record the settlement in the form of an award on agreed
terms.
(2) An award on agreed terms shall be made in accordance with the provisions of section
33 and shall state that it is an award.
(3) An award made under subsection (1) shall have the same status and effect as an
award on the merits of the case.
33. Form and contents of award
(1) An award shall be made in writing and subject to subsection (2) shall be signed by the
arbitrator.
(2) In arbitral proceedings with more than one arbitrator, the signatures of the majority
of all members of the arbitral tribunal shall be sufficient provided that the reason for
any omitted signature is stated.
(3) An award shall state the reasons upon which it is based, unless—
(a) the parties have agreed that no reasons are to be given; or
(b) the award is an award on agreed terms under section 32.
(4) An award shall state its date and the seat of arbitration as determined in accordance
with section 22 and shall be deemed to have been made at that seat.
(5) After an award is made, a copy of the award signed by the arbitrator in accordance
with subsections (1) and (2) shall be delivered to each party.
(6) Subject to subsection (8), unless otherwise agreed by the parties, the arbitral tribunal
may, in the arbitral proceedings before it, award simple or compound interest from
such date, at such rate and with such rest as the arbitral tribunal considers
P 388 appropriate, for any period ending not later than the date of payment of the whole or
P 389 any part of –
(a) any sum which is awarded by the arbitral tribunal in the arbitral proceedings;

232
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (b) any sum which is in issue in the arbitral proceedings but is paid before the date
of the award; or
(c) costs awarded or ordered by the arbitral tribunal in the arbitral proceedings.
(7) Nothing in subsection (6) shall affect any other power of an arbitral tribunal to award
interest.
(8) Where an award directs a sum to be paid, that sum shall, unless the award otherwise
directs, carry interest as from the date of the award and at the same rate as a
judgment debt.
34. Termination of proceedings
(1) The arbitral proceedings shall be terminated by a final award or by an order of the
arbitral tribunal in accordance with subsection (2).
(2) The arbitral tribunal shall order the termination of the arbitral proceedings where —
(a) the claimant withdraws the claim, unless the respondent objects to the
withdrawal and the arbitral tribunal recognizes the respondent’s legitimate
interest in obtaining a final settlement of the dispute;
(b) the parties agree on the termination of the proceedings; or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any
other reason become unnecessary or impossible.
(3) Subject to the provisions of section 35 and subsection 37(6), the mandate of the
arbitral tribunal shall terminate with the termination of the arbitral proceedings.
(4) Unless otherwise provided by any written law, the death of a party does not
terminate –
(a) the arbitral proceedings; or
(b) the authority of the arbitral tribunal.
35. Correction and interpretation of award or additional award
(1) A party, within thirty days of the receipt of the award, unless any other period of time
has been agreed upon by the parties —
(a) upon notice to the other party, may request the arbitral tribunal to correct in
the award any error in computation, any clerical or typographical error or other
error of similar nature; or
(b) upon notice to and with the agreement of the other party, may request the
arbitral tribunal to give an interpretation of a specific point or part of the
award.
(2) Where the arbitral tribunal considers the request made under subsection (1) to be
P 389 justified, it shall make the correction or give the interpretation within thirty days of
P 390 the receipt of the request and such interpretation shall form part of the award.
(3) The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a)
on its own initiative within thirty days of the date of the award.
(4) Unless otherwise agreed by the parties, a party may, within thirty days of the receipt
of the award and upon notice to the other party, request the arbitral tribunal to make
an additional award as to claims presented in the arbitral proceedings but omitted
from the award.
(5) Where the arbitral tribunal considers the request under subsection (4) to be justified,
it shall make the additional award within sixty days from the receipt of such request.
(6) The arbitral tribunal may, where it thinks necessary, extend the period of time within
which it shall make a correction, interpretation or an additional award under this
section.
(7) The provisions of section 33 shall apply to a correction or interpretation of the award
or to an additional award.
36. An award is final and binding
(1) An award made by an arbitral tribunal pursuant to an arbitration agreement shall be
final and binding on the parties and may be relied upon by any party by way of
defence, set-off or otherwise in any proceedings in any court.
(2) The arbitral tribunal shall not vary, amend, correct, review, add to or revoke an award
which has been made except as specifically provided for in section 35.
Chapter 7: Recourse Against Award
37. Application for setting aside
(1) An award may be set aside by the High Court only if –
(a) the party making the application provides proof that –
(i) a party to the arbitration agreement was under any incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties
have subjected it, or, failing any indication thereon, under the laws of
Malaysia;

233
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 (iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within
the terms of the submission to arbitration;
(v) subject to subsection (3), the award contains decisions on matters beyond
the scope of the submission to arbitration; or
P 390
P 391
(vi) the composition of the arbitral tribunal or the arbitral procedure was not
in accordance with the agreement of the parties, unless such agreement
was in conflict with a provision of this Act from which the parties cannot
derogate, or, failing such agreement, was not in accordance with this Act;
or
(b) the High Court finds that –
(i) the subject matter of the dispute is not capable of settlement by
arbitration under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
(2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with
the public policy of Malaysia where –
(a) the making of the award was induced or affected by fraud or corruption; or
(b) a breach of the rules of natural justice occurred –
(i) during the arbitral proceedings; or
(ii) in connection with the making of the award.
(3) Where the decision on matters submitted to arbitration can be separated from those
not so submitted, only that part of the award which contains decisions on matters not
submitted to arbitration may be set aside.
(4) An application for setting aside may not be made after the expiry of ninety days from
the date on which the party making the application had received the award or, if a
request has been made under section 35, from the date on which that request had
been disposed of by the arbitral tribunal.
(5) Subsection (4) does not apply to an application for setting aside on the ground that
the award was induced or affected by fraud or corruption.
(6) On an application under subsection (1) the High Court may, where appropriate and so
requested by a party, adjourn the proceedings for such period of time as it may
determine in order to allow the arbitral tribunal an opportunity to resume the
arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion
will eliminate the grounds for setting aside.
(7) Where an application is made to set aside an award, the High Court may order that
any money made payable by the award shall be brought into the High Court or
otherwise secured pending the determination of the application.
Chapter 8: Recognition and Enforcement of Awards
38. Recognition and enforcement
(1) On an application in writing to the High Court, an award made in respect of an
arbitration where the seat of arbitration is in Malaysia or an award from a foreign
State shall, subject to this section and section 39 be recognized as binding and be
enforced by entry as a judgment in terms of the award or by action.
P 391
P 392 (2) In an application under subsection (1) the applicant shall produce –
(a) the duly authenticated original award or a duly certified copy of the award; and
(b) the original arbitration agreement or a duly certified copy of the agreement.
(3) Where the award or arbitration agreement is in a language other than the national
language or the English language, the applicant shall supply a duly certified
translation of the award or agreement in the English language.
(4) For the purposes of this Act, ‘foreign State’ means a State which is a party to the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted
by the United Nations Conference on International Commercial Arbitration in 1958.
39. Grounds for refusing recognition or enforcement
(1) Recognition or enforcement of an award, irrespective of the State in which it was
made, may be refused only at the request of the party against whom it is invoked –
(a) where that party provides to the High Court proof that –
(i) a party to the arbitration agreement was under any incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties
have subjected it, or, failing any indication thereon, under the laws of the
State where the award was made;
(iii) the party making the application was not given proper notice of the

234
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within
the terms of the submission to arbitration;
(v) subject to subsection (3), the award contains decisions on matters beyond
the scope of the submission to arbitration;
(vi) the composition of the arbitral tribunal or the arbitral procedure was not
in accordance with the agreement of the parties, unless such agreement
was in conflict with a provision of this Act from which the parties cannot
derogate, or, failing such agreement, was not in accordance with this Act;
or
(vii) the award has not yet become binding on the parties or has been set aside
or suspended by a court of the country in which, or under the law of which,
that award was made; or
(b) if the High Court finds that –
(i) the subject-matter of the dispute is not capable of settlement by
arbitration under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
(2) If an application for setting aside or suspension of an award has been made to the
High Court on the grounds referred to in subparagraph (1)(a)(vii), the High Court may,
P 392 if it considers it proper, adjourn its decision and may also, on the application of
P 393 the party claiming recognition or enforcement of the award, order the other party to
provide appropriate security.
(3) Where the decision on matters submitted to arbitration can be separated from those
not so submitted, only that part of the award which contains decisions on matters
submitted to arbitration may be recognized and enforced.
Part III
ADDITIONAL PROVISIONS RELATING TO ARBITRATION
40. Consolidation of proceedings and concurrent hearings
(1) The parties may agree –
(a) that the arbitration proceedings shall be consolidated with other arbitration
proceedings; or
(b) that concurrent hearings shall be held,
on such terms as may be agreed.
(2) Unless the parties agree to confer such power on the arbitral tribunal, the tribunal
has no power to order consolidation of arbitration proceedings or concurrent
hearings.
41. Determination of preliminary point of law by court
(1) Any party may apply to the High Court to determine any question of law arising in the
course of the arbitration –
(a) with the consent of the arbitral tribunal; or
(b) with the consent of every other party.
(2) The High Court shall not consider an application under subsection (1) unless it is
satisfied that the determination –
(a) is likely to produce substantial savings in costs; and
(b) substantially affects the rights of one or more of the parties.
(3) The application shall identify the question of law to be determined and, except
where made with the agreement of all parties to the proceedings, shall state the
grounds that support the application.
(4) While an application under subsection (1) is pending, the arbitral proceedings may
be continued and an award may be made.
41A. Disclosure of information relating to arbitral proceedings and awards prohibited
(1) Unless otherwise agreed by the parties, no party may publish, disclose or
communicate any information relating to –
(a) the arbitral proceedings under the arbitration agreement; or
(b) an award made in those arbitral proceedings.
P 393
P 394
(2) Nothing in subsection (1) shall prevent the publication, disclosure or communication
of information referred to in that subsection by a party –
(a) if the publication, disclosure or communication is made –
(i) to protect or pursue a legal right or interest of the party; or
(ii) to enforce or challenge the award referred to in that subsection,

235
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 in legal proceedings before a court or other judicial authority in or outside
Malaysia;
(b) if the publication, disclosure or communication is made to any government
body, regulatory body, court or tribunal and the party is obliged by law to make
the publication, disclosure or communication; or
(c) if the publication, disclosure or communication is made to a professional or any
other adviser of any of the parties.
41B. Proceedings to be heard otherwise than in open court
(1) Subject to subsection (2), court proceedings under this Act are to be heard otherwise
than in an open court.
(2) Notwithstanding subsection (1), the court may order the proceedings to be heard in
an open court –
(a) on the application of any party; or
(b) if, in any particular case, the court is satisfied that those proceedings ought to
be heard in an open court.
(3) An order of the court under subsection (2) is final.
42. Reference on questions of law
[deleted by section 12 of the Arbitration (Amendment) (No 2) Act 2018]
43. Appeal
[deleted by section 13 of the Arbitration (Amendment) (No 2) Act 2018]
44. Costs and expense of an arbitration
(1) Unless otherwise agreed by the parties –
(a) the costs and expenses of an arbitration shall be in the discretion of the arbitral
tribunal who may –
(i) direct to and by whom and in what manner those costs or any part thereof
shall be paid;
(ii) tax or settle the amount of such costs and expenses; and
(iii) award such costs and expenses to be paid as between solicitor and client;
P 394 (b) any party may apply to the High Court for the costs to be taxed where an
P 395 arbitral tribunal has in its award directed that costs and expenses be paid by
any party, but fails to specify the amount of such costs and expenses within
thirty days of having being requested to do so; or
(c) each party shall be responsible for its own legal and other expenses and for an
equal share of the fees and expenses of the arbitral tribunal and any other
expenses relating to the arbitration in the absence of an award or additional
award fixing and allocating the costs and expenses of the arbitration.
(2) Unless otherwise agreed by the parties, where a party makes an offer to the other
party to settle the dispute or part of the dispute and the offer is not accepted and
the award of the arbitral tribunal is no more favourable to the other party than was
the offer, the arbitral tribunal, in fixing and allocating the costs and expenses of the
arbitration, may take the fact of the offer into account in awarding costs and
expenses in respect of the period from the making of the offer to the making of the
award.
(3) An offer to settle made under subsection (2) shall not be communicated to the
arbitral tribunal until it has made a final determination of all aspects of the dispute
other than the fixing and allocation of costs and expenses.
(4) Where an arbitral tribunal refuses to deliver its award before the payment of its fees
and expenses, the High Court may order the arbitral tribunal to deliver the award on
such conditions as the High Court thinks fit.
(5) A taxation of costs, fees and expenses under this section may be reviewed in the
same manner as a taxation of costs.
45. Extension of time for commencing arbitration proceedings
Where an arbitration agreement provides that arbitral proceedings are to be commenced
within the time specified in the agreement, the High Court may, notwithstanding that the
specified time has expired, extend the time for such period and on such terms as it thinks
fit, if it is of the opinion that in the circumstances of the case undue hardship would
otherwise be caused.
46. Extension of time for making award
(1) Where the time for making an award is limited by the arbitration agreement, the High
Court may, unless otherwise agreed by the parties, extend that time.
(2) An application under subsection (1) may be made –
(a) upon notice to the parties, by the arbitral tribunal; or
(b) upon notice to the arbitral tribunal and the other parties, by any party to the

236
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 proceedings.
(3) The High Court shall not make an order unless –
(a) all available tribunal processes for obtaining an extension of time have been
exhausted; and
(b) the High Court is satisfied that substantial injustice would otherwise be done.
P 395
P 396
(4) The High Court may exercise its powers under subsection (1) notwithstanding that the
time previously fixed by or under the arbitration agreement or by a previous order
has expired.
PART IV
MISCELLANEOUS
47. Liability of arbitrator
An arbitrator shall not be liable for any act or omission in respect of anything done or
omitted to be done in the discharge of his functions as an arbitrator unless the act or
omission is shown to have been in bad faith.
48. Immunity of arbitral institution
The Director of the Asian International Arbitration Centre (Malaysia) or any other person or
institution designated or requested by the parties to appoint or nominate an arbitrator,
shall not be liable for anything done or omitted in the discharge of the function unless the
act or omission is shown to have been in bad faith.
49. Bankruptcy
(1) Where a party to an arbitration agreement is a bankrupt and the person having
jurisdiction to administer the property of the bankrupt adopts the agreement, the
arbitration agreement shall be enforceable by or against the person.
(2) The High Court may direct any matter in connection with or for the purpose of
bankruptcy proceedings to be referred to arbitration if –
(a) the matter is one to which the arbitration agreement applies;
(b) the arbitration agreement was made by a person who has been adjudged a
bankrupt before the commencement of the bankruptcy proceedings; and
(c) the person having jurisdiction to administer the property does not adopt the
agreement.
(3) An application under subsection (2) may be made by –
(a) any other party to the arbitration agreement; or
(b) any person having jurisdiction to administer the property of the bankrupt.
50. Mode of application
Any application to the High Court under this Act shall be by an originating summons as
provided in the Rules of the High Court 1980 [P.U.[A]50/1980].
P 396
P 397
51. Repeal and savings
(1) The Arbitration Act 1952 [Act 93] and the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards Act 1985 [Act 320] are repealed.
(2) Where the arbitral proceedings were commenced before the coming into operation of
this Act, the law governing the arbitration agreement and the arbitral proceedings
shall be the law which would have applied as if this Act had not been enacted.
(3) Nothing in this Act shall affect any proceedings relating to arbitration which have
been commenced in any court before the coming into operation of this Act.
(4) Any court proceedings relating to arbitration commenced after the commencement
of this Act shall be governed by this Act notwithstanding that such proceedings arose
out of arbitral proceedings commenced before the commencement of this Act.
P 397

237
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Document information
Glossary
Publication Analytical Commentary: United Nations Commission on International Trade Law, 18th
session, Vienna, 3 to 21 June 1985, International Commercial Arbitration, Analytical
Arbitration in Malaysia: A Commentary on draft text of a model law on international commercial arbitration
Commentary on the (A/CN.9/264).
Malaysian Arbitration Act
CISG: United Nations Convention on Contracts for the International Sale of Goods (Vienna,
1980).
Jurisdiction Secretariat’s Report: United Nations Commission on International Trade Law, 12th session,
Vienna, 18 to 29 June 1979, Report of the Secretary-General: study on the application and
Malaysia interpretation of the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (New York, 1958) (A/CN.9/168).
travaux preparatoires: all the documents, such as memoranda, minutes of conferences,
Bibliographic reference and drafts of the treaty under negotiation, for the purpose of interpreting the treaty.
'Glossary', in Thayananthan UNCITRAL Report A/40/17: United Nations Commission on International Trade Law, 18th
Baskaran , Arbitration in session, Vienna, 3 to 21 June 1985, Report of the United Nations Commission on
Malaysia: A Commentary on International Trade Law on the work of its 18th session (A/40/17).
the Malaysian Arbitration
Act, (© Kluwer Law Warsaw Convention: Convention for the Unification of certain rules relating to international
International; Kluwer Law carriage by air (Warsaw, 1929).
International 2019) pp. 399 - 1958 New York Contention: Convention on the Recognition and Enforcement of Foreign
400 Arbitral Awards (New York, 1958).
1965 Washington Convention: Convention on the Settlement of Investment Disputes
between States and Nationals of other States (Washington, 1965).
P 399
P 400
1985 Model Law: United Nations Commission on International Trade Law Model Law on
International Commercial Arbitration, as adopted on 21 June 1985 (A/40/17, annex I).
2006 Model Law: United Nations Commission on International Trade Law Model Law on
International Commercial Arbitration, as adopted on 21 June 1985, and as amended on 7
July 2006 (A/40/17, annex I and A/61/17, annex I).
P 400

238
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 239
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.

Kluwer Arbitration is made available for personal use only. All content is protected by copyright and other intellectual property
laws. No part of this service or the information contained herein may be reproduced or transmitted in any form or by any means, or
used for advertising or promotional purposes, general distribution, creating new collective works, or for resale, without prior
written permission of the publisher.

If you would like to know more about this service, visit www.kluwerarbitration.com or contact our Sales staff at lrs-
sales@wolterskluwer.com or call +31 (0)172 64 1562.

KluwerArbitration

240
© 2019 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.