Arbitration & ADR, Malaysia updates

High court rules that non-parties to arbitration are not bound by confidentiality
Shearn Delamore & Co
  • Malaysia
  • 17 October 2019

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.

Federal Court rules on test applicable to applications to restrain arbitration proceedings made by non-parties
Shearn Delamore & Co
  • Malaysia
  • 08 August 2019

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.

Court of Appeal determines that negative declaratory arbitration awards are enforceable
Shearn Delamore & Co
  • Malaysia
  • 23 May 2019

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.

Court clarifies test applicable to applications to restrain arbitration proceedings by non-parties
Shearn Delamore & Co
  • Malaysia
  • 04 April 2019

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.

Court rules on threshold to set aside arbitral award that conflicts with public policy
Shearn Delamore & Co
  • Malaysia
  • 17 January 2019

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.

Another failed attempt by Indian government to set aside arbitral award before courts
Shearn Delamore & Co
  • Malaysia
  • 18 October 2018

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.

Arbitration Act 2005 does not oust courts' inherent jurisdiction
Shearn Delamore & Co
  • Malaysia
  • 09 August 2018

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.

Court directs suit involving non-parties to arbitration agreement to proceed ahead of arbitration proceedings
Shearn Delamore & Co
  • Malaysia
  • 26 April 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
  • 01 February 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
  • 19 October 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
  • 13 July 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
  • 06 July 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
  • 30 March 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
  • 12 January 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
  • 06 October 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
  • 19 May 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
  • 03 March 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
  • 10 September 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
  • 27 August 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
  • 18 June 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.

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