The high court recently set aside interim injunctions which had been granted pursuant to Section 11 of the Arbitration Act 2005 following an inter partes hearing. With this decision, the high court has confirmed that interim injunctions granted pursuant to Section 11 of the Arbitration Act may be set aside on evidence of suppression of material facts leading to the grant of the interim injunctions and if there has been a material change of circumstances since such interim measures were granted.
After much anticipation, the Federal Court has finally confirmed that the Construction Industry Payment and Adjudication Act 2012 applies only to construction contracts entered into after the act took effect on 15 April 2014. As such, any adjudication proceedings based on a claim arising from a construction contract which was entered into before that date, including adjudication decisions, are null and void.
A high court recently ruled that the prohibition against third parties publishing, disclosing or communicating information relating to arbitration proceedings does not extend to non-parties to an arbitration. This decision will affect the extent to which the confidential documents used in arbitral proceedings remain confidential.
The Federal Court recently overturned a Court of Appeal decision on the test which applies to applications to restrain arbitration proceedings made by non-parties to the proceedings. The Federal Court concluded its judgment by affirming the findings of the High Court in this case, including that the balance of justice was in favour of the injunction order and that there were serious issues to be tried.
A recent Court of Appeal case addressed whether a negative declaratory arbitration award is enforceable. The decision emphasises the narrow grounds that enable the high courts to refuse to recognise or enforce an arbitration award, as long as the requirements of Section 38(2) of the Arbitration Act are complied with. It also establishes a precedent that there is no barrier to the enforcement of a negative declaratory arbitration award.
In a recent Court of Appeal case, the plaintiff sought an injunction to restrain arbitration proceedings between the second, third and fourth defendants, despite the fact that it was not a party to the proceedings. Among other things, the court had to consider whether Sections 10(1)(a) and 10(3) of the Arbitration Act 2005 apply to non-parties to arbitration proceedings and determine the test for accepting an injunction application to restrain arbitration proceedings by non-parties.
The Federal Court recently clarified the high threshold required for an arbitral award to be set aside on grounds of public policy pursuant to Section 37 of the Arbitration Act. According to the court, although public policy is a broad concept, when applying it for the purpose of setting aside an award under Section 37, it should be read narrowly. Further, even where such a conflict with public policy is established, the court's power to set aside an award under Section 37 remains discretionary.
In 2005 the Indian government unsuccessfully applied to the Malaysian courts to set aside a partial award issued by the arbitral tribunal. In 2014 the Indian government issued the defendants with a notice to show cause, prompting the defendants to request the tribunal to be reconvened since there was a dispute on the quantification of sums payable. The tribunal granted the final award and the Indian government applied to the Malaysian High Court to set it aside.
The legal battle between La Kaffa International Co Ltd and Loob Holding Sdn Bhd, which has garnered much public attention, recently made its way to the Court of Appeal. This court's decision clarifies that the Arbitration Act 2005 does not oust the inherent jurisdiction or the powers of the courts to order interim measures. However, by virtue of Section 8, the court will be slow to provide relief which is not clearly spelled out in act.
The Court of Appeal recently considered the law governing a stay of proceedings in relation to non-parties to an arbitration agreement pending the outcome of arbitration proceedings. The court determined that the facts of the case supported the conclusion that the court proceedings involving the non-parties to the arbitration agreement should proceed ahead of the arbitration proceedings between the parties to the arbitration.
The Federal Court recently held that under Section 42 of the Arbitration Act, judicial intervention is warranted only where the award substantially affects the rights of one or more parties. A perverse, unconscionable and unreasonable award is not grounds to set aside the award under Section 42. Further, according to the court, Section 42 provides no jurisdiction to deal with questions of fact.
The Federal Court recently delivered its decision in a dispute involving the Laotian government and two foreign companies. The dispute related to the termination of a project development agreement and was set to be resolved by arbitration. Dissatisfied with the arbitration award, the Laotian government applied to the High Court to set aside the award on the ground that the arbitral tribunal had gone beyond the scope of arbitration.
The high court recently held that resisting an application for an interlocutory injunction is not a 'step in the proceedings'. The only steps that amount to a step in the proceedings under Section 10 of the Arbitration Act are those taken to advance the substantive dispute in the action. Parties' compliance with court directions will not constitute steps to advance the dispute.
The Federal Court recently held that Sections 2(1)(a) and (b) of the Advocates Ordinance must be read with Section 8. The statutory right given to advocates admitted in Sabah to practise in Sabah by virtue of Section 8(1) of the Advocates Ordinance cannot be taken away by tying the non-exclusive right of barristers and solicitors in England to appear for parties in arbitration proceedings with the practice in Sabah.
In a recent case, the plaintiff opposed the defendant's stay application on the basis that, among other things, the ambit of the arbitration clause was confined to disputes arising before and during the completion of the work. The contract did not provide for disputes after completion of the work to be referred to arbitration. Despite the ambiguous clauses, the court upheld the arbitration clause to give effect to the parties' intentions.
A high court recently granted an order approving the defendant's application to stay the court proceedings and have the dispute referred to arbitration pursuant to the Arbitration Act 2005, finding that the plaintiff had, through its conduct, demonstrated that it intended to refer the dispute to arbitration. This case demonstrates the Malaysian courts continued attempts to give effect to arbitration agreements and to discount attempts to renege on agreements to arbitrate by relying on technical objections.
The Federal Court recently ruled in a case involving an arbitration agreement within a production sharing contract. The court held that the term 'venue' was more than a mere reference to the geographical or physical seat and in this respect could be construed as the seat of arbitration. The court also held that the Supreme Court of India's earlier ruling did not bind the parties, as a decision issued by a court without jurisdiction does not give rise to res judicata.
A recent high court decision has set out clear parameters within which an arbitral award can be set aside as a result of an arbitral tribunal acting in excess of its jurisdiction and on the grounds of public policy. The court clarified that an award will be set aside on the basis of public policy only if it causes "actual prejudice" or offends the "fundamental principles of justice and morality".
The Court of Appeal recently held that general words are sufficient for the incorporation of arbitration clauses by way of reference, emphasising the importance of arbitration clauses in commercial contracts and the need to give business efficacy to commercial arrangements. Given the widespread use of arbitration clauses in commercial contracts, this is a welcome decision.
The Malaya High Court recently considered the recognition and enforcement of four Australian awards by a sole Australian arbitrator. The court held that it had no supervisory jurisdiction or power under the Arbitration Act 2005 to inquire into the validity and correctness of awards. In any event, the defendant should have applied to the Australian courts to challenge and review the validity and correctness of the awards.
The Malaya High Court recently considered awards rendered by arbitral tribunals which the parties neither claimed nor pleaded in the arbitral proceedings. The court found that the arbitral tribunal in the case at hand had exceeded its jurisdiction by rendering an award in respect of a matter not claimed or pleaded by the parties and thus amended the award accordingly.
The Court of Appeal recently considered whether the appointment of an arbitrator by an appointing authority can be challenged and, if so, on what basis. The court highlighted that a proper challenge to the appointment of an arbitrator should stem from the Arbitration Act. Further, if an arbitrator needs special knowledge or expertise, this should be made clear to the appointing authority before appointment.
The Federal Court recently considered the applicable limitation periods in respect of the registration and enforcement of arbitral awards. The court concluded that two separate limitation periods apply to arbitral awards from countries which are signatories to the New York Convention. The first is a six-year period for registration and the second is a 12-year period for enforcement.
The Malaysian Court of Appeal has upheld the High Court's grant of a Mareva injunction that froze the assets of six individuals and two companies. This decision bodes well for international arbitration, as the Malaysian court granted an injunction in aid of an injunction in a foreign jurisdiction.
The High Court in Sabah and Sarawak recently ruled in a case to set aside an arbitration award rendered in Paris pursuant to the rules of the International Chamber of Commerce. The plaintiff applied to have the award recognised and enforced within Malaysia under Section 38 of the Arbitration Act 2005, while the defendant applied to set it aside.
The Court of Appeal recently set aside high court orders granting injunctions restraining the appellant from proceeding with arbitration proceedings and an order refusing a stay in relation to the arbitration proceedings, in line with the Arbitration (Amendment) Act 2011. The court noted that under the amended act, a stay of court proceedings is mandatory unless the agreement is null and void or impossible to perform.
In a recent dispute involving the delivery of de-acidified palm oil and catalyst resins, the Kuala Lumpur High Court held that in light of an amendment to the Arbitration Act, it was no longer possible to argue that in respect of the controversy between the parties, there was no dispute with regard to the matter to be referred to arbitration. The test should instead be limited to what is included in the wording of the act.
In an ongoing case concerning energy contractors, the Court of Appeal recently upheld the high court decision confirming the setting aside of the arbitral award. The Court of Appeal agreed with the high court that in assuming jurisdiction over disputes arising out of the mining contracts in arbitration under the project development agreement, the arbitral tribunal had gone beyond the scope of the submission to arbitration.
The Court of Appeal recently considered whether an arbitration clause could oust the statutory jurisdiction of the court under Section 181 of Companies Act, either wholly or in part. In its decision, the court also held that while there could be findings on the facts that would be res judicata in view of the final award, these matters should be fully argued when the petition is heard on its merits.
The Federal Court recently considered what amounts to an arbitration agreement in the context of incorporation by reference. The appellant had argued that the reference in the standard terms and conditions to an arbitration clause was insufficient, as the arbitration clause was not attached to the sales contracts and the sales contracts were not signed by the appellant. The court held that that was not a prerequisite.
The Putrajaya Court of Appeal recently considered Section 9 of the Arbitration Act 2005 and what amounts to an agreement to arbitrate. Section 9 defines 'arbitration agreement' and provides that such an agreement includes, among other things, a reference in an agreement to a document containing an arbitration clause where the agreement is in writing and the reference is such as to make that clause part of the agreement.
The courts were recently asked to examine whether a party may file an application to set aside an arbitral award outside the timeframe provided under the Arbitration Act. Under the act, an aggrieved party may seek to set aside an arbitral award within a 90-day limit; in the case at hand, there was a nine-month delay. However, the Putrajaya Court of Appeal held that it had the jurisdiction to extend this timeframe.
The Putrajaya Federal Court recently analysed a technical services agreement between two parties in order to determine what constitutes an agreement to arbitrate. The court recognised that there should be minimal interference with parties seeking to have their dispute arbitrated, but that clear terms and written evidence of an agreement to arbitrate were a requirement for the grant of a stay.
An arbitral award was recently set aside by the Kuala Lumpur High Court after it found that the arbitrator could not be said to be impartial. The sole arbitrator had signed a statement of independence before being appointed, declaring his impartiality and independence, but failed to disclose the fact that he later became a director of the bank that had financed the joint venture between the parties.
The Federal Court recently upheld an arbitral award that had been granted following a dispute over a production sharing contract. The court decided against setting aside the award, but held that if the award had been tainted with illegality, it could have been set aside on the grounds that an error of law has been committed. The court also held that all matters regarding the construction of a document are questions of law.
In Sabah in East Malaysia, no one can practise as an advocate or solicitor unless his or her name is on the roll and he or she has a valid practising certificate with authorisation to act in such role. This would ordinarily be of little interest to the international arbitration community, but in a recent case the Sabah courts construed it to mean that foreign lawyers were barred from appearing as counsel in arbitral proceedings.
Sections 38 and 39 of the Arbitration Act 2005 empower the court to recognise and enforce an award from a foreign state. The Kuala Lumpur High Court recently had occasion to consider the exercise of this power. In its decision, the court held that there was no valid arbitration agreement from which the arbitral tribunal could validly render an award and refused to recognise and enforce the arbitral awards.
In a recent decision the High Court confirmed that the Arbitration Act places a discretionary, not obligatory, requirement on the court regarding the 90-day timeframe for filing an application to set aside an arbitral award. The court thus retains some degree of discretion to extend this timeframe where circumstances so require.
The Kuala Lumpur High Court recently ruled on which of two competing arbitration clauses applied. The court found that the dispute should be left to determination at trial, as it involved serious disputes that required resolution after the witness testimony of the parties had been heard in court. Furthermore, allowing arbitration to proceed could result in large sums of money being wasted.
The Kuala Lumpur High Court recently ruled on the enforcement of a foreign arbitral award. The case considered by the court concerned the enforcement in Malaysia of an award obtained by the plaintiff from a Russian tribunal, pursuant to the Arbitration Act 2005. In its ruling the court found that the defendant had failed to show that there had been a failure to adhere to arbitral procedure.
Section 11 of the Arbitration Act 2005 empowers the court to issue an injunction pending the resolution of disputes between parties. In a recent decision, the court ruled that where (following a decision of the arbitral tribunal against the defendant) the damages that the defendant would be required to pay would be large and would ultimately come out of public funds, a grant of interim relief by way of an injunction was in order.
The Kuala Lumpur High Court recently decided on a request to set aside an arbitral award, brought under the Arbitration Act 2005. The award was based on the allegation that the arbitrators had acted in breach of natural justice in making the award, and that the matter was not deliberated on by a three-person arbitration panel. The court upheld the challenges, set aside the award and remitted the matter for rehearing.
The High Court recently considered an arbitrator's duty of disclosure. Upon learning that the respondent had been nominated as arbitrator by the claimant in more than 20 arbitrations, the applicant felt that those previous appointments ought to have been disclosed to the parties to the arbitration. The central issue was whether a co-arbitrator has a duty of disclosure to the arbitral tribunal in addition to the parties.
In a recent case the High Court relied on its powers under the 1952 Arbitration Act, which provides for the removal of an arbitrator on grounds of misconduct or lack of impartiality. Although the court found that the opposing party had not made a case for removal and the arbitrator's conduct did not warrant interference, concerns were raised over whether the arbitrator's continued presence would lead to a miscarriage of justice.
In a recent case the Court of Appeal ruled that as the defendant had failed to demonstrate that an arbitration agreement had been signed, the claim could not be subject to an agreement to arbitrate. An arbitration agreement must be in writing before the court will give effect to what it thinks may be the parties' intention.
Two awards were issued in favour of the plaintiff and enforcement was sought pursuant to Section 38 of the Arbitration Act 2005. The defendant opposed the enforcement of the awards on the grounds of public policy pursuant to Section 39(1)(b)(ii) of the act. The Malaya High Court held that 'public policy' means more than a mere conflict with domestic laws and must be such as to lead to a substantive miscarriage of justice.
In a recent case the Court of Appeal took the opportunity to restate the limited jurisdiction of the Malaysian courts to set aside or remit an award on the grounds of, among other things, an error of law on the face of the award. The court held that errors by the arbitrator in drawing wrong inferences of fact from the evidence before him were not sufficient to warrant the setting aside of the award.
The Arbitration Act 2005, which repealed the Arbitration Act 1952 and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985, was enacted to address the various inadequacies in those acts. However, Malaysia faces continued challenges in the enforcement of foreign arbitral awards under the Foreign Arbitral Awards Convention Act.
When a dispute arose between Cairn Energy India Pty Ltd and the government of India over a production sharing contract, the matter was referred to arbitration in Malaysia. The dispute was decided in favour of Cairn Energy, but the government of India challenged the award on the basis that there was manifest error in its construction. On appeal, an error of construction was held to be an insufficient ground for setting aside the award.
This update summarizes three arbitration disputes involving construction contracts. In each case the court considered whether to grant a stay of proceedings pursuant to Section 10 of the Arbitration Act 2005. The third and most recent decision enforced the two earlier decisions and reiterated the Malaysian courts' position on staying proceedings pending a reference to arbitration.
A recent case dealt with the enforcement of foreign arbitral awards pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985. The court held that since His Majesty the Yang di-Pertuan Agong had not declared, by way of an order in the Official Gazette, that the United Kingdom was a party to the New York Convention, the award could not be enforced.
The High Court recently considered the ambit of the savings provision in Section 51 of the Arbitration Act 2005. The case involved arbitration proceedings that had been commenced in Malaysia after the act came into force and resulted in an award being handed down in October 2007. The court held that all proceedings subsequent to the handing-down of the arbitral award were governed by the act.
A recent case involved an apparent conflict between an arbitration clause and an exclusive jursidiction clause in an insurance policy. The policy holder sought to refer to arbitration a disagreement regarding whether he had suffered any 'permanent disability' as required under the policy. The respondent relied on the exclusive jurisdiction clause to deny him that right.
The Kuala Lumpur High Court recently ruled on the enforceability of an arbitration clause which formed part of an agreement that had been assigned. When a dispute arose between the employer and the subcontractor, the subcontractor referred the matter to arbitration under the main contract. The employer challenged the arbitrator's jurisdiction on three grounds.
In a recent case the High Court of Malaysia dismissed the plaintiff’s application for an injunction pending a reference to arbitration in Singapore, on the basis that the High Court has no statutory or inherent jurisdiction to grant injunctive leave in matters where the seat of arbitration is outside Malaysia. The Court of Appeal has dismissed the appeal.
In a recent case the court was required to interpret the repeal and savings provision of Section 51 of the Arbitration Act 2005. In doing so, it had to deal with discrepancies in the wording of the English and Malay texts of Section 51(2). The court chose to apply the Malay version, which states that if an arbitration agreement was made before the commencement of the 2005 act, the 1952 act will apply.
In a recent subcontracting case the plaintiff applied for and obtained an ex parte injunction to restrain the defendant from proceeding with arbitration proceedings in respect of a sum of money which the plaintiff allegedly owed the defendant. The defendant applied for a stay of proceedings pursuant to Section 10 of the Arbitration Act 2005.
In a recent case a Malaysian court of appeal considered the validity of an arbitration clause which limited the timeframe for referring a claim to arbitration. The appellant contended that a clause imposing a timeframe on referring claims to arbitration was void.
In a recent case the defendant applied for a stay of proceedings pending arbitration pursuant to Section 6 of the Arbitration Act 1952. At issue was whether extended project services negotiated by the parties after the execution of a technical services agreement fell within the ambit of the arbitration clause provided for in the agreement.
In a recent case the plaintiff sought security and an order to restrain the defendant from dissipating its assets outside of the court’s jurisdiction until after the determination and disposal of the arbitration proceedings. In assessing its powers to grant interim relief, the court considered Sections 11(1)(f) and 11(1)(g) of the Arbitration Act 2005.
The High Court recently ruled in a case involving a settlement agreement regarding shares of a Malaysian company. The settlement agreement was governed by an arbitration clause under the International Chamber of Commerce Arbitration Rules, with a seat in Singapore.
This update summarizes three recent arbitration disputes: one arising out of a retention bond in a construction contract; another concerning a joint venture agreement which contained an arbitration clause; and the third in relation to a partnership contract and reseller's agreement. In each case the court considered whether to grant a stay of proceedings.
In a recent case the High Court considered the setting aside of an arbitral award relating to the construction of a hockey stadium in Malaysia. The application to set aside was filed pursuant to the Arbitration Act 1952. The court was asked to consider whether any misconduct or impropriety had taken place.
In a recent case the Court of Appeal was asked to decide whether a High Court decision, which had overturned an arbitral award on the grounds of an error of law, was valid. Its ruling confirmed the criteria used to determine whether court inteference in an arbitration is justified.
The Kuala Lumpur High Court has issued its decision in I-Expo Sdn Bhd v TNB Engineering Corporation Sdn Bhd. This is the first reported case in respect of the Arbitration Act 2005; it involved a dispute arising from a contract for the decommissioning and dismantling of the defendant's power station.
In Bintulu Development Authority v Pilecon Engineering Bhd the High Court ruled that the appellant could not dispute the validity of the arbitration proceedings as it had participated in the arbitration proceedings from the start by jointly appointing an arbitrator with the other party.
The High Court has held that, in appeals of arbitration awards, the court's jurisdiction is limited as it has no jurisdiction to examine the correctness of the arbitral award on its merit. The court's function is not to re-hear the matter, but rather to determine whether there is an error of law on the face of the award.
In a recent decision the Court of Appeal has construed an arbitration clause and concluded that, as some of the disputes were of a non-contractual nature, they did not fall within the scope of the arbitration clause. The court held that the claims were basically claims under the law of tort and thus did not fall within the scope of the arbitration clause.
In recent months the Court of Appeal has issued decisions dealing with arbitral awards. In one case, the court held that Section 23 of the Arbitration Act 1952 confers a wide discretion on the court to remit an award. However, this discretion will not be exercised merely on the premise that the parties believe that the award is bad on the face of it.
The Arbitration Act 2005 came into force on March 15 2006, bringing in significant changes to arbitration practice in Malaysia. Among other changes, the new act restricts the level of court intervention in arbitrations and places the degree of court intervention under the control of the parties.