Arbitration & ADR, Malaysia updates

Court directs suit involving non-parties to arbitration agreement to proceed ahead of arbitration proceedings
Shearn Delamore & Co
  • Malaysia
  • April 26 2018

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.

Federal Court rules on arbitrators' jurisdiction to award pre and post-award interest
Shearn Delamore & Co
  • Malaysia
  • February 01 2018

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.

Federal Court reinforces law that supervisory courts may review arbitral awards
Shearn Delamore & Co
  • Malaysia
  • October 19 2017

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.

High court clarifies proceedings under Arbitration Act
Shearn Delamore & Co
  • Malaysia
  • July 13 2017

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.

Federal Court clarifies statutory rights granted by Advocates Ordinance
Shearn Delamore & Co
  • Malaysia
  • July 06 2017

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.

High court gives effect to parties' intentions in face of ambiguously drafted clauses
Shearn Delamore & Co
  • Malaysia
  • March 30 2017

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.

Malaysian courts continue to give effect to arbitration agreements
Shearn Delamore & Co
  • Malaysia
  • January 12 2017

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.

Federal Court rules venue of arbitration is proper seat
Shearn Delamore & Co
  • Malaysia
  • October 06 2016

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.

When can arbitral awards be set aside based on excess of jurisdiction and public policy?
Shearn Delamore & Co
  • Malaysia
  • May 19 2016

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".

Court rules on incorporation of arbitration clauses in commercial contracts
Shearn Delamore & Co
  • Malaysia
  • March 03 2016

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.

Court cannot rule on validity and correctness of foreign arbitral awards
Shearn Delamore & Co
  • Malaysia
  • September 10 2015

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.

High Court rules on unpleaded claims during arbitral proceedings
Shearn Delamore & Co
  • Malaysia
  • August 27 2015

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.

Can an appointment by an appointing authority be challenged?
Shearn Delamore & Co
  • Malaysia
  • June 18 2015

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.

Court rules on limitation periods for arbitral awards
Shearn Delamore & Co
  • Malaysia
  • April 02 2015

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.

Court of Appeal grants foreign injunction
Shearn Delamore & Co
  • Malaysia
  • November 27 2014

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.

Court considers ICC arbitration award
Shearn Delamore & Co
  • Malaysia
  • August 21 2014

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.

Court of Appeal considers stay of arbitration proceedings under amended act
Shearn Delamore & Co
  • Malaysia
  • May 29 2014

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.

Court considers application of arbitration clause in delivery dispute
Shearn Delamore & Co
  • Malaysia
  • May 22 2014

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.

Decision to set aside arbitral award on jurisdictional grounds upheld
Shearn Delamore & Co
  • Malaysia
  • March 06 2014

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.

Does arbitration clause oust statutory jurisdiction of court?
Shearn Delamore & Co
  • Malaysia
  • December 19 2013

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.

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