Dispute Resolution

Top 5 Arbitration Cases in Malaysia till 2021

The researcher has dealt with construction arbitration cases in Malaysia. For clarity, the researcher has divided each case into four parts:

  • Name of the case
  • Date of judgment
  • Name of judges
  • Importance of the case

Thus, the construction arbitration cases in Malaysia are as follows:

The Felda Decisions

The researcher has taken two Felda Decisions. In these cases, the High Court decided whether to grant the anti-arbitration injunction or not. They are as follows:

Date of Judgment: 23rd September 2020

Date of Judgment: 25th September 2020

Judges: Anand Ponnudurai JC, Wong Chee Lin J

Importance of these cases

These two cases have the same background facts. Their judgments are only two days apart. The judgment shows the contrasting approach taken in granting an anti-arbitration injunction.

The Federal Land Development Authority (FELDA) and FELDA Investment Corporation Sdn Bhd (FIC) filed a conspiracy suit against Synergy Promenade Sdn Bhd and other alleged wrongdoers. The suit was to challenge certain contracts, including a Development Agreement, and other documents. Consequently, Synergy Promenade commenced arbitration proceedings against FIC based on the arbitration clause in the Development Agreement between them.

In the first judgment, the FIC filed an application against Synergy Promenade. One of the main reliefs sought by the FIC was an anti-arbitration injunction. In other words, they permanently wanted to restrain the continuation of arbitration proceedings.

The court held that a higher threshold is required to grant the anti-arbitration injunction. The FIC was unable to prove how the arbitration proceedings would be oppressive to them. Thus, the court dismissed the application for an anti-arbitration injunction.

In the second judgment, both FIC and FELDA were applying for the anti-arbitration injunction against Synergy Promenade. The relief sought was similar. They wanted an injunction to restrain Synergy Promenade from the continuation of arbitration proceedings. This resulted in the pendency of the conspiracy suit.

Since FELDA was not a party to the arbitration agreement. A different standard would be applicable when FELDA applied for the anti-arbitration injunction. The standard would be American Cyanamid factors. Finally, in the second judgment, the court granted the anti-arbitration injunction by a non-party to the arbitration clause.

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Master Mulia decision

Date of Judgment: 27th August 2020

Judges: Zawawi Salleh FCJ, Vernon Ong FCJ (wrote the grounds of judgment), Abdul Rahmah Sebli FCJ, Zaleha Yusof FCJ, Badariah Sahamid JCA

Importance of this case

This case sets out important principles for the setting aside of an arbitral award on the ground of breach of natural justice.

Firstly, the court will consider the following factors:

  • Breach of natural justice rule
  • Manner in which breach was made
  • Connection between breach and natural justice

Secondly, the court should consider:

  • Seriousness of the breach

In other words, the court must consider whether the breach was significant to the outcome of the arbitration proceedings. Thirdly, if the breach was immaterial to the decision, the arbitral award would not be set aside. In other words, the court can refuse to set aside the award if the breach had no impact on the decision. However, if a major breach was made, the award would be set aside.

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Pancaran Prima decision

Date of Judgment: 27 August 2020 

Judges: Zawawi Salleh FCJ, Vernon Ong FCJ, Abdul Rahman Sebli FCH (wrote the grounds of judgment), Zaleha Yusof FCJ, Badariah Sahamid JCA

Importance of this case

The key issue in this case was:

  • Whether the arbitrator, well acquainted with the construction industry could apply his own knowledge when the arbitrator made a key finding in the arbitral award?

The arbitrator found that most contractors in the Malaysian construction industry included a profit margin of 10-15% to manage a nominated subcontractor. Parties were not given a chance to submit. Thus, the question arose whether principles of natural justice were breached or not?

Read Also – Practical examples of alternative dispute resolution cases

The Federal Court differentiated between a ‘lay arbitrator’ and an ‘arbitrator with experience in a particular field’. In this case, the arbitrator was of the latter category. He was a professional engineer, a chartered arbitrator, and a Fellow of the Chartered Institute of Arbitrators. The power of arbitrators to draw on their knowledge and expertise in appropriate cases is essential to arbitration in cases.

Ken Grouting decision

Case: Ken Grouting Sdn Bhd v. RKT Nusantara Sdn Bhd and Another Appeal 

Judges: Kamardin Hashim JCA, S Nantha Balan JCA (wrote the grounds of judgment), Lee Heng Cheong JCA

Importance of this case

This decision is important because arbitrators should stick to their deadlines for the timely delivery of awards. The arbitrator shall deliver the award within 3 months from the receipt of the last closing statement from the parties. If the arbitrator requires more time, he may extend the duration and notify the parties.

In the present case, the arbitrator did not notify the party about the extension of the time frame of the decision. The original deadline was on 26 April 2016. The arbitrator eventually delivered his award on 10 March 2017 and issued an amended award on 7 April 2017. None of the parties raised any objection that the deadline had passed. An application to set aside the arbitral award was filed.

Firstly, the Court of Appeal stated that delivery of arbitral awards by a fixed date is time-sensitive. Secondly, the arbitrator’s failure to deliver the award results in the cessation of the arbitrator’s jurisdiction. Therefore, such an award is a nullity unless extended under section 46 of the Arbitration Act 2005. Under this section, the High Court may make an order to extend the time for the making of an award.

However, the court may not extend time on its own volition under section 46. The parties or the arbitrator have to make an application for purposes of section 46.

Tune Talk decision

Date of Judgment: 13th November 2020

Judge: Liza Chan JC

Importance of this case

The parties to the shareholders’ agreement were Padda Gurtaj Singh, Jason Lo, Celcom, and Tune Talk. The agreement contained an arbitration clause. Plaintiff bought a sizeable block of Tune Talk shares from the other shareholder, Jason Lo. Tune Talk and the company secretary refused to register the transfer of the shares. Plaintiff then filed a court action against Tune Talk, and the company secretary to force them to register the transfer of the shares. Defendant, Tune Talk filed an application to put a stay on the court proceedings.

Sections 106 and 107 of the Companies Act 2016 provide that “the company shall enter the name of the transferee in the register of members as a shareholder within 30 days from the receipt of the instrument of transfer of shares. If the company refuses to register a transfer, the transferee or transferor may apply to the court for an order to register the transfer.”

These sections do not expressly preclude the arbitrability of the matter. The court held that the jurisdiction of arbitral tribunal applies to a dispute out of a civil or contractual relation. Thus, the court allowed the stay of the court proceedings pending arbitration.

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by Sushree Swagatika

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