ARBITRATION ACT OF MALAYSIA 2005 (ACT 646)

The Arbitration Act of Malaysia 2005 (Act 646)

Arbitration proceedings in Malaysia are governed by the Arbitration Act of Malaysia 2005 (Act 646). The Act distinguishes between domestic and international arbitration. Section 3(3)(b) removes the application of Part III of the Act to an international arbitration unless the parties agree otherwise in writing. Therefore, an international arbitration will not be subject to consolidation of proceedings nor to a determination of preliminary points of law by a Court.

One of the benefits of instituting an arbitration proceeding under the Act is that it provides parties with the right to representation by any person of his choice and there are no conditions imposed on the appointment of an arbitrator or arbitrators. Therefore, parties may appoint foreign arbitrators to arbitrate a dispute and select a foreign lawyer to represent them in an arbitration. In tandem with this policy the Legal Profession Act 1976[3] was also amended to remove the restriction on legal practice by foreign lawyers who may act as arbitrator or represent any party in arbitral proceedings conducted under the Act.  These amendments to the Legal Profession Act have allowed the London barristers chambers 39 Essex Street to open offices in Kuala Lumpur.

Furthermore, the Act enables the High Court and the arbitral tribunal to grant interim measures before the conclusion of an arbitration. There are also express provisions empowering an arbitral tribunal to grant pre- and post-award interest on any sums that are in dispute.

What is an arbitration agreement?

The Act, amongst others, widely defines the meaning of an “agreement in writing” making it easier for many forms of arbitration agreements to come within the ambit of the Act. An arbitration agreement includes any form of recognition of arbitration made in electronic form. Therefore, communications contained in an email could amount to an arbitration agreement.

Can an arbitral award be challenged in court?

Awards given under the Malaysian Arbitration Act are final and binding and may not be set aside by the Courts unless they come within specific exceptions set out in section 37 of the Act.  An application can be made to the High Court to set aside an award if the party making the application is able to prove vitiating factors, such as, the invalidity of the arbitration agreement, the absence of proper notice or the award deals with a matter beyond the terms of the submission to arbitration. The Court can also set aside the award if it finds that the subject matter in dispute is not capable of settlement under existing laws or the award is in conflict with public policy.

A stay of court proceedings would usually be ordered by the Court if there is an arbitration agreement unless the arbitration agreement is null and void, inoperative or incapable of being performed. A stay may be refused where the parties have agreed to submit to the Court’s jurisdiction or where the parties have been involved in Court proceedings prior to the arbitration.

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