Commercial Arbitration

Last verified on Thursday 13th April 2023

Commercial Arbitration: Malaysia

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Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Malaysia

Malaysia acceded to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) on 5 November 1985, subject to the “reciprocity” reservation, viz: Malaysia will apply the New York Convention only to the recognition and enforcement of awards made in the territory of another contracting state. Malaysia further declares that it will apply the New York Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under Malaysian law.

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2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Malaysia

Malaysia has not entered into any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards. Malaysia is a party to the ASEAN Comprehensive Investment Agreement between members of the Association of Southeast Asia Nations (ASEAN) countries and Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (ICSID Convention). The Convention on the Settlement of Investment Disputes Act 1966 makes provision for the recognition and enforcement of ICSID awards.

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3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Malaysia

The national law governing arbitration is the Malaysian Arbitration Act 2005, which is based on the 1985 UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law) and the New Zealand Arbitration Act 1996. The Arbitration Act 2005 applies to both domestic and international arbitrations where the seat is in Malaysia.

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4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Malaysia

There are several arbitration bodies and institutions based in Malaysia. These include the Malaysian Institute of Architects, the Institution of Engineers Malaysia, the Palm Oil Refiners Association of Malaysia, the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor, and the Malaysian Institute of Arbitrators.

The Asian International Arbitration Centre (AIAC) (formerly KLRCA) is the main arbitration institution in Malaysia. It was established in 1978 under the auspices of the Asian-African Legal Consultative Organization, an international organisation comprising 47-member states from across the region. The AIAC administers arbitrations under its own arbitration rules – the AIAC Arbitration Rules (which adopt the UNCITRAL Rules for Arbitration), the AIAC i-Arbitration Rules, the AIAC Fast Track Rules and the AIAC Mediation Rules. AIAC also publishes guides and circulars to facilitate the use of and understanding of its rules.

Apart from the provision of institutional support for domestic and international arbitrator and other ADR proceedings, AIAC also offers hearing facilities and ancillary administrative services to tribunals operating ad hoc or under the auspices of other institutions, such as the ICSID, the Permanent Court of Arbitration and the Court of Arbitration for Sports where AIAC is an official alternative hearing centre. Under section 13 of the Arbitration Act 2005, the Director of the AIAC is designated as the appointing authority.

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5. Can foreign arbitral providers operate in your jurisdiction?

Malaysia

There is nothing prohibiting foreign arbitral providers operating in Malaysia.

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6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Malaysia

There is no specialist arbitration court in Malaysia. Arbitration-related matters are heard at first instance by the High Court (typically the commercial courts or the construction court (for construction disputes)), usually with a right of appeal to the higher courts.

The judiciary in Malaysia is familiar with, and supportive of, the law and practice of international arbitration. Malaysia is generally known to be a pro-arbitration jurisdiction.

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Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Malaysia

Section 9 of the Arbitration Act 2005 sets out the formal requirements for a valid and enforceable arbitration agreement. An arbitration agreement is defined as “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not”. An arbitration agreement must be “in writing” and it is regarded to be in writing if its content is recorded in any form, whether or not the agreement or contract has been concluded orally, by conduct, or by other means (section 9(4)(a)), or it is contained in an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other (section 9(4)(b)). An arbitration agreement is also in writing if it is in the form of an electronic communication that the parties make by means of data message if the information contained therein is accessible so as to be useable for subsequent reference (section 9(4A)). Data message means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange, electronic mail, telegram, telex or telecopy (section 9(6)).

It was held by the Federal Court in Ajwa for Food Industries Co (MIGOP), Egypt v Pacific Inter-Link Sdn Bhd [2013] 5 MLJ 625 (FC) that an agreement making reference to a document containing an arbitration clause does not need to be signed for that clause to be valid, pursuant to sections 9(3) and 9(4) of the Arbitration Act 2005.

An arbitration agreement should contain information such as the scope of the disputes to be referred to arbitration, the number of arbitrators and procedure for the appointment of arbitrators, whether the arbitration is to be administered by an arbitral institution or otherwise, the seat and language of the arbitration and the governing law of the arbitration agreement.

An arbitration agreement can cover future disputes (section 9(1)).

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8. Are any types of dispute non-arbitrable? If so, which?

Malaysia

The Arbitration Act 2005 provides that both contractual and non-contractual disputes may be submitted to arbitration (section 9(1)). Commercial disputes arising under a valid arbitration agreement are generally arbitrable, unless the arbitration agreement is contrary to public policy, or the subject matter is not capable of settlement by arbitration under the laws of Malaysia (section 4(1)). The Arbitration Act 2005 does not list or delimit matters that are not capable of settlement by arbitration and there is also lack of judicial guidance as to what claims are non-arbitrable.

Matters that are generally considered non-arbitrable include disputes in relation to criminal offences, matrimonial and family law disputes, insolvency and winding-up matters, matters falling within statutory rights or remedies, and public interest matters.

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9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Malaysia

Generally, third parties who are non-parties or strangers to an arbitration agreement cannot be bound by the arbitration clause. It has been held by the Federal Court that the Arbitration Act 2005 should not apply to a party who does not fall within the scope of the legislation. Where the dispute in the arbitration affects a non-party, priority should be given for the dispute to be litigated in court (Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd & Ors [2019] 5 MLJ 1 (FC)).

A third party may be a person claiming under or through a party to an agreement. For example, a guarantor to the agreement in dispute, a third party to whom an agreement has been novated or a beneficiary or a successor to an arbitration agreement. In these circumstances, the third parties may wish to claim the benefit of the arbitration agreement and be enjoined in the arbitral proceedings. However, this is generally subject to the consent of all parties to the arbitration and the third party.

Rule 21.1 of the AIAC Arbitration Rules 2021 provides that any party to an arbitration or an additional party may, no later than the filing of the statement of defence and counterclaim, or at any time thereafter provided there exists exceptional circumstances, request one or more additional parties to be joined as a party to the arbitration where:

  • all parties to the arbitration and the additional party consent in writing to the joinder;
  • such additional party is prima facie bound by the arbitration agreement that gives rise to the arbitral proceedings; or
  • the participation of such additional party is necessary for the efficient resolution of the dispute and directly affects the outcome of the arbitral proceedings.

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10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Malaysia

An arbitral tribunal has no power to order consolidation of arbitration proceedings or concurrent hearings unless the parties agree to confer such power on the arbitral tribunal (section 40(2) of the Arbitration Act 2005). Where there is such an agreement between the parties, the parties may agree on any terms for consolidation.

Rule 22 of the AIAC Arbitration Rules 2021 empowers the Director of the AIAC to consolidate two or more arbitral proceedings, at the request of a party where:

  • all parties agree in writing to consolidate;
  • the claims and counterclaims in the arbitrations are made under the same arbitration agreement; or
  • the claims and counterclaims are made under different arbitration agreements, provided that the dispute arises from the same legal relationship and the arbitration agreements are compatible.

In deciding whether to allow the consolidation request, the Director shall consult all parties and the arbitral tribunal, and have regard to all relevant circumstances considered appropriate, including: (i) the stage of the pending arbitrations and whether any arbitrator has been nominated or appointed; (ii) whether the disputes under each arbitration concern the same legal relationship; (iii) whether the rights or reliefs claimed are in respect of, or arise out of, the same transaction or a series of related transactions; (iv) the compatibility of the arbitration agreements; (v) any prejudice that may be caused to any of the Parties; and (vi) the efficiency and expeditiousness of the proceedings (Rule 22.5).

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11. Is the "group of companies doctrine" recognised in your jurisdiction?

Malaysia

In Malaysia, the corporate veil may only be lifted where there is fraud, either actual or equitable (Law Kam Loy v Boltex Sdn Bhd [2005] 3 CLJ 355 (CA); Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd (previously known as Alcatel Network Systems (M) Sdn Bhd [2014] 3 MLJ 785 (FC)) or when a company is employed as a mere façade to avoid an existing contractual obligation (Gurbachan Singh s/o Bagawan Singh & Ors v Vellasamy s/o Pennusamy & Ors [2015] 1 MLJ 773 (FC)).

In the case of Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 3 MLJ 622 (FC), the Federal Court clarified the doctrine of piercing the corporate veil of a company while adopting the principles enunciated in the UK Supreme Court decision of Prest v Prest and Others [2013] 4 All ER 673 (Prest). Lord Sumption in Prest highlighted that a company’s corporate veil may be lifted if it is being abused for the purpose of some relevant wrongdoing. While suggesting that the interchangeable usage of “façade” and “sham” is vague and causes confusion in identifying such relevant wrongdoing, Lord Sumption formulated two distinct principles for dealing with façade and sham, namely (i) the “concealment principle’ (to be applied where the wrongdoing relates to the abuse of the corporate personality as a “façade”; here, it does not involve the piercing of the corporate veil as the court does not disregard the ‘façade’ but instead looks behind the corporate personality to determine the true facts concealed by the corporate structure); and (ii) the “evasion principle” (to be applied where the wrongdoing relates to the abuse of the corporate personality as a sham; here, it involves the piercing of corporate veil).

The Federal Court also affirmed the position set out in its earlier decision, Gurbachan Singh Bagawan Singh & Ors v Vellasamy Pennusamy & Other Appeals [2015] 1 MLJ 773 (FC) that the court will lift the corporate veil if a company was set up for fraudulent purposes. It further clarified that the ability of a court to unravel transactions by reason of fraud in itself allows for the lifting or disregarding of the corporate veil independently of the doctrine of piercing the corporate veil.

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12. Are arbitration clauses considered separable from the main contract?

Malaysia

Section 18(2) of the Arbitration Act 2005 provides that an arbitration clause that forms part of an agreement shall be treated as an agreement independent of the other terms of the agreement and a decision by the arbitral tribunal that the agreement is null and void shall not ipso jure entail the invalidity of the arbitration clause. The validity of an arbitration agreement is not affected by the validity of the main contract and hence, a decision by an arbitral tribunal that the main contract is null and void does not invalidate the agreement to arbitrate.

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13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal's jurisdiction and competence?

Malaysia

Yes, section 18(1) of the Arbitration Act 2005 provides that the arbitral tribunal can rule on its own jurisdiction without the need for court intervention. The principle of competence-competence is recognised by the Federal Court in Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 (FC) that the arbitral tribunal is given very wide powers to decide on its own jurisdiction or the scope of its authority, or the existence or validity of the arbitration agreement.

Challenges towards the jurisdiction and competence of an arbitral tribunal may be determined by the arbitral tribunal as a preliminary question or in an award on the merits (section 18(7)). A party may raise a plea that the arbitral tribunal does not have jurisdiction not later than the submission of the statement of defence (section 18(3)) or that the arbitral tribunal is exceeding the scope of its authority as soon as the matter is raised during the arbitral proceedings (section 18(5)). Notwithstanding the time limits stipulated, the arbitral tribunal may admit such plea if it considers the delay justified (section 18(6)).   

Should the arbitral tribunal rule as a preliminary question that it has jurisdiction, any party may appeal to the High Court within 30 days of having received notice of that ruling (section 18(8)). However, should the arbitral tribunal rule that it has no jurisdiction, that ruling is not appealable to the High Court. No appeal lies against the decision of the High Court.

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14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Malaysia

Malaysian courts generally adopt a pro-arbitration approach and seek to uphold the validity of an arbitration clause. Arbitration clauses should be drafted in simple and clear terms to avoid uncertainty and inoperability of the arbitration agreement. Parties are encouraged to adopt the model arbitration clauses published by arbitral institutions, if available. Nonetheless, to avoid procedural difficulties, parties drafting arbitration clauses with a Malaysian seat should seek to include a clear reference to arbitration, clearly identify the seat of the arbitration, the law governing the arbitration clause, the administering institution (if any), the applicable procedural rules (if not those of the administering institution), the number and qualification (if applicable) of arbitrators, the procedure by which the arbitral tribunal is to be constituted, the language of arbitration, and other issues that are typical for an arbitration agreement that is a valid, operative and capable of being performed.

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15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Malaysia

Institutional international arbitration is generally preferred to ad hoc international arbitration. That said, ad hoc international arbitration is common and parties to ad hoc arbitrations often adopt UNCITRAL Rules as the Arbitration Act 2005 has largely adopted the UNCITRAL Rules.

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16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Malaysia

A multi-party arbitration agreement may be drafted to provide for the arbitration to be commenced as a multi-party proceeding and/or for the arbitral tribunal to have the power to involve additional parties once proceedings have commenced, either through joinder or consolidation.

The AIAC Arbitration Rules 2021 allow a claimant to file a single notice of arbitration in respect of claims arising from multiple contracts between the same parties together with a consolidation request (Rule 22.4). As for the appointment of arbitrators, in multi-party arbitrations, Rule 9.7 of the AIAC Arbitration Rules 2021 provides that where an even-numbered tribunal is used, all claimants and respondents will nominate half the required number of arbitrators, whereas for odd-numbered tribunals, all claimants and respondents will nominate an equal number of arbitrators who shall thereafter nominate a presiding arbitrator. If joint nomination fails, the entire arbitral tribunal shall be constituted by the Director of the AIAC. In this case, any nominated arbitrators shall be excluded from consideration and any appointed arbitrators shall be released, unless the parties agree to retain such nominations or appointments.

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Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Malaysia

Section 23 of the Arbitration Act 2005 provides that an arbitration is deemed to have commenced on the date on which a request in writing for the dispute to be referred to arbitration is received by the respondent. The request for arbitration must also comply with section 30(3) of the Limitation Act 1953. In addition to this, the limitation provisions under the Limitation Act 1953 are also applicable to arbitration (section 30(1)). For limitation period in respect of contractual claims, section 6(1)(a) of the Limitation Act 1953 is applicable.

Parties may agree on the time limit to refer a dispute to arbitration. If there is no express agreement between the parties on the time limit for parties to refer a dispute to arbitration, the general limitation period under the Limitation Act 1953 will apply. Pursuant to section 45 of the Arbitration Act 2005, notwithstanding that the specified time for commencement of arbitral proceedings has expired, the High Court may extend the time if it is of the opinion that in the circumstances of the case undue hardship would otherwise be caused.

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Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Malaysia

Section 30(1) of the Arbitration Act 2005 provides that the arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given state shall be construed as directly referring to the substantive law of that state and not to its conflict of laws rules (section 30(2)).

Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable (section 30(4)). The arbitral tribunal shall, in all cases, decide in accordance with the terms of the agreement and shall take into account the usages of the trade applicable to the transaction (section 30(5)). If the parties have expressly authorised it to do so, the arbitral tribunal may decide according to equity and conscience (section 30(4A)).

As to the law governing the arbitration agreement that will be relevant to issues of the arbitral tribunal’s jurisdiction and arbitrability of disputes, in the absence of an express provision stipulating the law governing the arbitration agreement, the law of the seat of arbitration that is deemed to be the closest and most real connection to the arbitration agreement would generally apply (Thai Lao Lignite Co Ltd & Anor v Government of the Lao People’s Democratic Republic [2017] 9 CLJ 272 (FC)).

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Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a party's choice of arbitrator?

Malaysia

No, unless parties contract otherwise. The Arbitration Act 2005 does not place any limitation with respect to a party’s choice of arbitrator, apart from the standard duty of impartiality and independence.

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20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Malaysia

No person is precluded from acting as an arbitrator by reason of nationality, unless otherwise agreed by the parties (section 13(1) of the Arbitration Act 2005). Foreign arbitrators are allowed to participate in arbitral proceedings in Malaysia and are exempted from the “fly-in fly-out” prohibition (section 37A of the Legal Profession Act 1976). They will not be subject to the restriction of 60 days nor require immigration approval to enter into Malaysia to conduct arbitral proceedings.

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21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Malaysia

Parties are free to determine the number of arbitrators (section 12 of the Arbitration Act 2005) and the procedure for appointing the arbitrators (section 13).

Where the parties fail to determine the number of arbitrators, section 12(2) of the Arbitration Act 2005 provides for a tribunal of three arbitrators in international arbitrations, and one arbitrator in domestic arbitrations. 

Where the parties fail to agree on the procedure for appointing arbitrators and the arbitration consists of three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator as the presiding arbitrator (section 13(3)). Where a party fails to appoint an arbitrator within 30 days of receipt of a request in writing to do so from the other party or the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment or such extended period as the parties may agree, either party may apply to the Director of the AIAC for such appointment (section 13(4)).

In an arbitration with a single arbitrator, where the parties fail to agree on the arbitrator or the procedure for appointing the arbitrator, either party may apply to the Director of the AIAC for such appointment (section 13(5)).

Either party may also request the Director of the AIAC to take the necessary measures in the event that a party fails to act as required under an agreed appointment procedure, the parties, or two arbitrators, are unable to reach an agreement under such procedure, or a third party, including an institution, fails to perform any function entrusted to it under such procedure (section 13(6)).

If the Director of the AIAC is unable to act or fails to act on the above requests within 30 days of the request, any party may apply to the High Court for such appointment.

In appointing an arbitrator, the Director of the AIAC or the High Court (as the case may be) shall have due regard to: (i) any qualifications required of the arbitrator by the agreement of the parties; (ii) other considerations that are likely to secure the appointment of an independent and impartial arbitrator; and (iii) in the case of an international arbitration, the advisability of appointing an arbitrator of a nationality other than those of the parties.

No appeal shall lie against any decision of the Director of the AIAC or the High Court for the appointment of arbitrators under section 13 of the Arbitration Act 2005.

The procedure for the appointment of arbitrators can also be found in Rule 9 of the AIAC Arbitration Rules 2021.

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22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Malaysia

Arbitrators are afforded immunity from liability under section 47 of the Arbitration Act 2005 and shall not be liable for any act or omission in respect of anything done or omitted to be done in the discharge of his or her functions as an arbitrator unless the act or omission is shown to have been in bad faith.

Rule 45.1 of the AIAC Arbitration Rules 2021 expands the scope of this immunity beyond the arbitral tribunal to the AIAC, its employees, the Director, and any tribunal secretary where these individuals will not be liable for any act or omission related to the conduct of the arbitral proceedings governed under the AIAC Arbitration Rules. In addition, the AIAC, its employees and the Director cannot be compelled to give evidence in any arbitration or court proceedings relating to any arbitral proceedings administered by the AIAC or in the AIAC’s records.

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23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Malaysia

Arbitrators will generally require the parties to provide advance deposits in respect of their fees and expenses. The Arbitration Act 2005 does not expressly provide for the collection of deposits by arbitral tribunals.

If the arbitration is administered, arbitral institutions, subject to the applicable rules, usually collect deposits and expenses in respect of the arbitrator’s fees and expenses in advance of the arbitration proceedings on the arbitrator’s behalf. If an arbitral tribunal refuses to deliver its award before the payment of its fees and expenses, the High Court may order the arbitral tribunal to deliver the award on such conditions as the High Court thinks fit (section 44(4) of the Arbitration Act 2005).

Rule 41 of the AIAC Arbitration Rules 2021 set out the manner in which deposits are collected by the AIAC.  

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Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Malaysia

An arbitrator may be challenged only if there are (i) circumstances giving rise to justifiable doubts about the arbitrator's impartiality or independence or (ii) the arbitrator does not possess qualifications agreed to by the parties (section 14(3) of the Arbitration Act 2005). An arbitrator has a statutory duty to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence (section 14(1)) and this duty to disclose arises from the time of appointment and continues throughout the arbitral proceedings (section 14(2)).

The IBA Guidelines on Conflicts of Interest in International Arbitration, although not binding, are generally taken into account.

The challenge procedure is set out in section 15 of the Arbitration Act 2005.

It has been held that matters concerning an arbitrator’s impartiality and independence must be determined by reference to the parties to, and issues in, the particular arbitration, and not based on an arbitrator’s lack of independence or impartiality in another arbitral proceeding (MMC Engineering Group Bhd & Anor v Wayss & Freytag (M) Sdn Bhd & Anor [2015] MLJU 477).

In Low Koh Hwa @ Low Kok Hwa (practising as sole chartered architect at Low & Associates) v Persatuan Kanak-Kanak Spastik Selangor & Wilayah Persekutuan and another case [2021] 10 MLJ 262, the High Court allowed an application to set aside an award on the basis that the arbitrator apparent bias resulted in the award being in conflict with the public policy of Malaysia, and a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award (sections 37(1)(b)(ii) and (2)(b)(i)). The court adopted the UK Supreme Court Judgment in Halliburton v Chubb [2020] UKSC 38 in deciding that an arbitrator’s failure to make disclosure is relevant to assessing whether there are justifiable doubts as to the arbitrator’s impartiality. The High Court in the case confirmed that an arbitrator is under a continuing duty under the Arbitration Act 2005 to make full and timeous disclosure of facts and circumstances that are likely to give rise to justifiable doubts as to the arbitrator’s impartiality or independence. This requires an arbitrator to “disclose to the [p]arties all the relevant details which would enable a “fair-minded and informed observer” to decide objectively on whether there are justifiable doubts on the Arbitrator’s impartiality and/or independence … without delay”.

The High Court considered that the applicable test for arbitrator apparent bias in Malaysia is the restated “real possibility of apparent bias” test approved by Lord Hodge in Halliburton (ie, “whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased”).

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Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Malaysia

An arbitral tribunal may, at the request of a party, grant interim measures, unless the parties agree otherwise (section 19 of the Arbitration Act 2005). The arbitral tribunal may grant the interim measure, whether in the form of an award or in another form, at any time prior to the issuance of the final award, to order a party to:

  • maintain or restore the status quo, pending the determination of the dispute; 
  • take action that would prevent or refrain from taking action that is likely to cause current or imminent harm or prejudice to the arbitral process itself; 
  • provide a means to preserving assets out of which a subsequent award may be satisfied; 
  • preserve evidence that may be relevant and material to the resolution of the dispute; or 
  • provide security for costs of the dispute. 

An interim measure issued by an arbitral tribunal shall be recognised as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the court, irrespective of the country in which it was issued (section 19H).

The High Court has the power to grant the same interim measures as the arbitral tribunal above before or during arbitral proceedings in respect of an international arbitration, whether or not the seat is in Malaysia (section 11). Where an arbitral tribunal has already ruled on any matter that is relevant to the application to the High Court, the court shall treat any findings of fact made by the arbitral tribunal as conclusive for the purposes of the application.

In the case of Malaysia Resources Corporation Bhd v Desaru Peace Holdings Club Sdn Bhd [2022] MLJU 3355, the High Court confirmed that arbitral tribunals take priority over courts when granting interim measures. It was held that the court will only entertain and grant interim measures in exceptional circumstances, where (i) the interim measure is sought against a third party whom the arbitral tribunal has no jurisdiction, (ii) the matters are very urgent, (iii) the High Court’s coercive powers of enforcement are needed, or (iv) the arbitral tribunal has not been constituted.

The court has the power to grant anti-suit injunctions to restrain a party from commencing court proceedings in other jurisdictions in breach of an arbitration agreement (Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316 (CA)).  

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26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Malaysia

An arbitral tribunal may, upon application of a party, order security for costs to be paid as an interim measure (section 19(2)(e) of the Arbitration Act 2005).

Similarly, the High Court may make an order for security for costs of the dispute to be paid under section 11(1)(e).

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Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Malaysia

The arbitral tribunal must treat the parties with equality and each party must be given a fair and reasonable opportunity of presenting their case (section 20 of the Arbitration Act 2005). The parties must also be given reasonable prior notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents (section 26(3)).

As to the rules of procedure, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings, subject to the provisions of the Arbitration Act 2005 (section 21(1)). If the parties fail to agree on the procedural rules, the arbitral tribunal may conduct the arbitration in any such manner it considers appropriate. The power conferred upon the arbitral tribunal includes the power to:

  • determine the admissibility, relevance, materiality and weight of any evidence;
  • draw on its own knowledge and expertise;
  • order the provision of further particulars in a statement of claim or statement of defence;
  • order the giving of security for costs;
  • fix and amend time limits within which various steps in the arbitral proceedings must be completed;
  • order for the discovery and production of documents or materials within the possession or power of a party;
  • order the interrogatories to be answered;
  • order that any evidence be given on oath or affirmation; and
  • make such other orders as the arbitral tribunal considers appropriate.

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28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Malaysia

Where a respondent fails to participate in an arbitration or submit its statement of defence without showing sufficient cause, the arbitral tribunal shall continue proceedings without treating the failure in itself as an admission of the claimant’s allegations (section 27(b) of the Arbitration Act 2005). If any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal shall similarly continue the proceedings and make the award on the evidence on it (section 27(c)). If the claimant fails to submit its statement of claim without showing sufficient cause, the arbitral tribunal shall terminate the proceedings (section 27(c)). If the claimant fails to proceed with the claim, the arbitral tribunal may make an award dismissing the claim or give directions, with or without conditions, for the speedy determination of the claim (section 27(d)).

Rule 30 of the AIAC Arbitration Rules 2021 sets out the manner in which the arbitral tribunal is to proceed in the event of a default by the parties, similar to section 27 of the Arbitration Act 2005.  

Where any of the advance deposits requested by the AIAC is not paid in full, the AIAC shall afford the other party an opportunity to pay the defaulting party’s share of the deposits and make full payment of the required deposits (Rule 41). In the event the respondent fails to pay its share of the deposit, the claimant may make the required payment. Should the claimant opt not to make the required payments, then the arbitral tribunal may, after consultation with the Director of AIAC, suspend or terminate the arbitral proceedings or any part thereof. In such circumstances where the arbitration proceedings are terminated pursuant to non-payment of the arbitration deposits by a respondent, it appears that a claimant may then proceed to pursue its claim against the respondent in the civil courts by reason that the arbitration agreement between the parties has become inoperative (Kebabangan Petroleum Operating Co Sdn Bhd v Mikuni (M) Sdn Bhd & Ors [2021] 1 MLJ 693 (CA)).

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29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Malaysia

Parties are free to agree on the procedure to be adopted by the arbitral tribunal in conducting the proceedings. This includes how evidence is submitted and collected. In the event that the parties fail to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings, the arbitrator shall have the power to determine the admissibility, relevance, materiality and weight of any evidence (section 21 of the Arbitration Act 2005). Arbitrators are not bound by the rules of evidence contained in the Evidence Act 1950 (section 2 of the Evidence Act 1950).

In practice, the International Bar Association Rules on the Taking of Evidence in International Arbitration 2020 (2020 IBA Rules) are increasingly being taken into account in arbitrations in Malaysia. Given that the Prague Rules (the Rules on the Efficient Conduct of Proceedings in International Arbitration) are designed to mirror more closely the inquisitorial approach generally adopted in civil law jurisdictions, it may be some time before they become commonplace in arbitrations in Malaysia, which is a common law jurisdiction.

Where the 2020 IBA Rules are applicable, the arbitral tribunal may, at the request of a party or on its own motion, exclude evidence obtained illegally.

In the giving of evidence, the arbitral tribunal may order that any evidence be given on oath or affirmation (section 27(3)(h)). The arbitral tribunal may also appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal or require a party to give the expert any relevant information or to produce or to provide access to any relevant documents, goods or other property for the expert’s inspection (section 28(1)).

An arbitral tribunal has similar powers under the AIAC Arbitration Rules 2021 in dealing with the submission and collection of evidence in the arbitration.

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30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Malaysia

The High Court may make an order for a party to preserve evidence that may be relevant and material to the resolution of the dispute (section 11(1)(d) of the Arbitration Act 2005).

In addition, with the approval of the arbitral tribunal, the parties are entitled to make an application to the High Court for assistance in taking evidence (section 29(2)). The High Court has the power to order the attendance of a witness to give evidence or, where applicable, to produce documents on oath or before an officer of the High Court or any other person, including the arbitral tribunal.

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31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Malaysia

Unless the parties agree otherwise, it is for the tribunal to decide on the scope of document production. Parties may adopt by agreement or order of the arbitral tribunal procedures regulating document production as set out in the IBA Rules and Prague Rules. 

Parties may submit with their respective statements of claim or defence any document that they consider to be relevant or to add a reference to the documents or other evidence that they may submit (section 25 of the Arbitration Act 2005). The arbitral tribunal may also order the discovery and production of documents or materials within the possession or power of a party (section 21(3)(f)) and order the interrogatories to be answered (section 21(3)(g)).

oath or before an officer of the High Court or any other person, including the arbitral tribunal.

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32. Is it mandatory to have a final hearing on the merits?

Malaysia

Unless parties otherwise agree, the arbitral tribunal as the master of the proceedings has the power to decide whether to hold oral hearings for the presentation of evidence or oral arguments, or whether the proceedings shall be conducted on the basis of documents and other materials (section 26(1) of the Arbitration Act 2005). However, if a party makes an application for oral hearing, the arbitral tribunal will have to hold such oral hearing at an appropriate stage of the proceedings, unless the parties have agreed that no hearings shall be held (section 26(2)). As such, although a final hearing on the merits is not mandatory, it is open to either party to make such a request if they deem an oral hearing necessary.

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33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Malaysia

Yes, hearings and procedural meetings may be conducted anywhere convenient to the parties although it was the generally accepted practice for hearings and procedural meetings to be conducted physically.

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Award

34. Can the tribunal decide by majority?

Malaysia

Yes, unless the parties have agreed otherwise, in any arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members (section 31(1) of the Arbitration Act 2005).

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35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Malaysia

The types of remedies or relief that an arbitral tribunal may grant are not limited by the Arbitration Act 2005 or any institutional rules. The range of remedies that arbitral awards may cover include monetary compensation, specific performance and other penalties, injunctions, declaratory relief, rectification, filling gaps and adaptation of contracts, interest and costs. The types of remedies or relief that may be granted are necessarily confined to the powers conferred on the arbitral tribunal by the parties in the agreement to arbitrate. Nonetheless, even if the matters are arbitrable, there are some reliefs that form part of the exclusive jurisdiction of the court pursuant to statute that may not be granted by an arbitral tribunal, for example, the winding up of a company.  

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36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Malaysia

The Arbitration Act 2005 does not prohibit dissenting opinions. It can be implied that it is permitted as section 33(2) of the Arbitration Act 2005 provides that the signatures of the majority of all members of the arbitral tribunal shall be sufficient, provided that the reason for any omitted signature is stated. The dissenting opinion does not form part of the award. It is not common in practice.

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37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Malaysia

The only legal requirement for the enforcement of an arbitral award is the production of a duly authenticated original award or a duly certified copy of the award, and the original arbitration agreement or a duly certified copy of the agreement (section 38 of the Arbitration Act 2005).

The requirements relating to the form and contents of an arbitral award are provided in section 33 of the Arbitration Act 2005. An award must be made in writing and signed by the sole arbitrator or where there is more than one arbitrator, by a majority of the members of the arbitral tribunal, provided that the reason for any omitted signature is stated.

An arbitral award must state the reasons for the award unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms. The award must state its date and the seat of the arbitration and thereafter, a copy of the award duly signed shall be delivered to each party.

The Arbitration Act 2005 does not prescribe a time limit within which an award should be rendered. However, if the arbitration is administered under the AIAC Arbitration Rules 2021, rule 32 requires the arbitral tribunal to submit its draft of the final award to the Director of AIAC within 90 days from the close of proceedings for a technical review.

If the time for making an award is limited by the arbitration agreement, the High Court may extend that time, unless parties agreed otherwise (section 46). An application may be made by the arbitral tribunal with notice to the parties or by any party to the proceedings with notice to the arbitral tribunal and the other parties.

The importance for an arbitrator to comply with the timelines provided for to deliver the arbitral award was considered in the landmark case of Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd [2021] 2 CLJ 173 (CA) where the Court of Appeal held that the rules of arbitration that stipulate that an award must be delivered by a certain date is time-sensitive and affect the mandate of the arbitrator and therefore his jurisdiction. Even if the rules of arbitration enable the arbitrator to unilaterally extend the time to deliver the award subject to parties being notified, such rules are equally time-sensitive and will also have bearing on the arbitrator’s mandate and jurisdiction. The arbitrator’s mandate and jurisdiction will automatically cease after the passing of the deadline for the award to be delivered and the failure of a party to raise an objection cannot amount to a waiver of their rights whatsoever. Such an award is not only liable to be set aside but is also a nullity and remains so unless an order to extend time is obtained from the High Court by the parties or the arbitrator pursuant to section 46 of the Arbitration Act 2005.

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38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Malaysia

Section 35 of the Arbitration Act 2005 provides that within 30 days of the receipt of the award, a party may request the arbitral tribunal to correct in the award any error in computation, any clerical or typographical error or other error of similar nature. A party may also, within the same time frame and with the agreement of the other party, request the arbitral tribunal to give an interpretation of a specific point or part of the award. The arbitral tribunal may also correct any error on its own initiative within 30 days of the award. Where the arbitral tribunal considers the request made to be justified, it shall make the correction or give the interpretation within 30 days of the receipt of the request and such interpretation shall form part of the award.

In a case where the tribunal has omitted to decide one of the issues or claims presented in the arbitral proceedings, a party may within 30 days of the receipt of the award request the arbitral tribunal to make an additional award. Where the arbitral tribunal considers the request to be justified, it shall make the additional award within 60 days of the receipt of such request.

In the event that the arbitral tribunal thinks it necessary, it may extend the period of time within which it shall make a correction, interpretation or an additional award under this section.

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Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Malaysia

Parties are entitled to recover the costs and expenses of an arbitration. Parties are free to agree on how costs are to paid, failing which, section 44 of the Arbitration Act 2005 gives the arbitral tribunal the discretion to direct to and by whom and in what manner those costs or any part thereof shall be paid, tax or settle the amount of such costs and expenses and award such costs and expenses to be paid as between solicitor and client (section 44(1)).

The general principle in Malaysia in relation to costs is that the arbitral tribunal will typically order costs in favour of the successful party and to award all reasonable costs incurred by that party during the arbitration. This would generally include legal fees and disbursements reasonably incurred by the party in respect of the arbitration.

Any party may apply to the High Court for the costs to be taxed where an arbitral tribunal has in its award directed that costs and expenses be paid by any party, but fails to specify the amount of such costs and expenses within 30 days of having being requested to do so (section 44(1)(b)). In the absence of an award or additional award fixing and allocating the costs and expenses of the arbitration, each party shall be responsible for its own legal and other expenses and for an equal share of the fees and expenses of the arbitral tribunal and any other expenses relating to the arbitration (section 44(1)(c)).

Article 40(2) of the UNCITRAL Arbitration Rules, read with Rule 40 of the AIAC Arbitration Rules 2021 provide that the term “costs” includes only: 

  • the fees of the arbitral tribunal;
  • the AIAC administrative fee;
  • reasonable expenses incurred by the arbitral tribunal;
  • any costs incurred in using the AIAC’s facilities and additional services throughout the course of the arbitral proceedings; and
  • any other costs as directed by the arbitral tribunal.

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40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Malaysia

Unless the parties agreed otherwise, the arbitral tribunal may, in the arbitral proceedings before it, award simple or compound interest from such date, at such rate and with such rest as the arbitral tribunal considers appropriate, for any period ending not later than the date of payment of the whole or any part of any sum which is awarded by the arbitral tribunal in the arbitral proceedings, any sum which is in issue in the arbitral proceedings but is paid before the date of the award, or costs awarded or ordered by the arbitral tribunal in the arbitral proceedings (section 33(6) of the Arbitration Act 2005).

Where an award directs a sum to be paid, that sum shall, unless the award otherwise directs, carry interest as from the date of the award and at the same rate as a judgment debt (section 33(8)).

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Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Malaysia

An arbitral award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties (section 36 of the Arbitration Act 2005), and is not appealable based on questions of fact or law. The arbitral tribunal shall not vary, amend, correct, review, add to or revoke an award that has been made except where there is a correction or interpretation of award or additional award under the provisions of the Arbitration Act 2005.

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42. Are there any other bases on which an award may be challenged, and if so what?

Malaysia

Parties may apply to set aside or resist recognition and enforcement of an award under the following limited grounds set out in sections 37 and 39 of the Arbitration Act 2005:

  • a party to the arbitration agreement was under any incapacity;
  • the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the laws of Malaysia;
  • the party making the application was not given proper notice of the appointment of an arbitrator or the arbitral proceedings, or was otherwise unable to present their case;
  • the award deals with a dispute that is not contemplated by or does not fall within the terms of the submission to arbitration;
  • the award contains decisions on matters that are beyond the scope of the submission to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • the subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or
  • the award is in conflict with the public policy of Malaysia.

Recognition and enforcement of the arbitral award may also be refused where the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made (section 39) – Malaysian Bio-XCell Sdn Bhd v Lebas Technologies Sdn Bhd & Another Appeal [2020] 3 CLJ 534 (CA).

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43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Malaysia

No, the parties cannot agree to exclude or limit a party’s right under the Arbitration Act 2005 to set aside or challenge the arbitral award. Sections 37 and 39 of the Arbitration Act 2005 are mandatory provisions that cannot be opted out of.

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Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Malaysia

The Malaysian courts retain the discretion to enforce an award that has been set aside or suspended by the courts in the seat of arbitration (section 39(1)(a)(vii) of the Arbitration Act 2005), but this is rare in practice.

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45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Malaysia

The Malaysian courts generally adopt a pro-arbitration stance. The prevailing approach of the courts is to uphold the sanctity of party autonomy and recognise and enforce arbitral awards unless the arbitral awards can be challenged within the limited grounds of sections 37 and 39 of the Arbitration Act 2005.

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46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Malaysia

Generally, there is no state immunity for commercial arbitrations involving the state or state entity. However, unless the parties otherwise agreed, the Government Proceedings Act 1956 will remain applicable, where, in the event that a sum is awarded against the government (defined to include the federal government and government of the states), the winning party may apply to court for a certificate to be issued stating the sums to be paid by the government. Upon service of the certificate on the government, it will be under a statutory obligation to make the necessary payment. If the government fails to do so, the applicant may file an application for judicial review to seek an order of mandamus to compel the payment of the sum.  

In the context of sovereign immunity in respect of commencement of arbitration proceedings against a state or state entity, in the case Government of Malaysia v Nurhima Kiram Fornan & Ors [2020] 6 CLJ 429, the High Court granted an anti-arbitration injunction to restrain foreign arbitration proceedings on the basis of sovereign immunity.

In that case, the government of Malaysia commenced proceedings in the Malaysian courts against the heirs of the Sultan of Sulu and the sole arbitrator (as defendants) to restrain them from proceeding with an arbitration commenced by the defendants in Spain pursuant to a Deed of Cession 1878, and for a declaration that:

  • there is no arbitration agreement between the parties;
  • there was no waiver of sovereign immunity by Malaysia in respect of the dispute; and
  • that Malaysia is the natural and proper forum to resolve the dispute over territorial rights arising from the Deed of Cession.

The High Court held that:

  • there was no valid and binding arbitration agreement;
  • customary international principle of sovereign immunity is given domestic effect in Malaysia through case law. As such, under domestic law, Malaysia has sovereign immunity from foreign judicial and arbitration proceedings unless waived or if the dispute falls within the acta jure gestionis exception to the rule. Since the Deed of Cession is not a trading or commercial agreement, but one relating to the cession of land by a then-sovereign to the predecessors of a now sovereign state, Malaysia had, in the absence of any waiver, absolute immunity from the jurisdiction of the Spanish proceedings which appointed the arbitrator, and from the arbitrator himself. The government of Malaysia as a sovereign state cannot be forced to submit to the jurisdiction of the sole arbitrator. The dispute in the instant case which is over territorial rights in Sabah, is not arbitrable, and the sole arbitrator cannot assume jurisdiction over Malaysia without a waiver of sovereign immunity; and
  • Malaysia is the natural and proper forum to determine the territorial dispute.

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Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Malaysia

Section 41A of the Arbitration Act 2005 provides that unless the parties otherwise agreed, no party may publish, disclose or communicate any information relating to the arbitral proceedings under the arbitration agreement or an award made in those arbitral proceedings.

There are three exceptions to the rule (ie, where the provision does not apply if the publication, disclosure or communication is made):

  • to protect or pursue a legal right or interest of the party, or enforce or challenge the award in legal proceedings before a court or other judicial authority in or outside of Malaysia;
  • to any government body, regulatory body, court or tribunal and the party is obliged by law to make such publication, disclosure, or communication; or
  • to a professional or any other adviser of any of the parties.

The confidentiality obligation does not extend to non-parties to an arbitral proceeding (Dato’ Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd [2019] 10 MLJ 693).

Further, section 41B provides that court proceedings under Arbitration Act 2005 are to be heard otherwise than in an open court. Nonetheless, the court may order the proceedings to be heard in an open court if an application is made by any party, or if in any particular case, the court is satisfied that those proceedings should be heard in an open court. Such order of the court is final.

The AIAC Arbitration Rules 2021 similarly provide for confidentiality obligations relating to the arbitral proceedings (Rule 44). However, the obligation for confidentiality extends further as the provision expressly state that the obligations apply equally to the arbitral tribunal, the Director, the AIAC, any tribunal secretary and any witness or expert appointed by the arbitral tribunal, and the parties are required to seek an undertaking of confidentiality from all those that they involve in the arbitration, including any authorised representative, witness of fact, expert or service provider. The arbitral tribunal has the power to take appropriate measures, including issuing an order or Award for costs or damages, for any breaches by a party of the provisions in Rule 44.

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48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Malaysia

As mentioned, section 41A of the Arbitration Act 2005 provides that, unless otherwise agreed, no party can publish, disclose, or communicate any information relating to the arbitral proceedings under the arbitration agreement or an award made in the said arbitral proceedings. Confidentiality obligations are similarly provided in Rule 44 of the AIAC Arbitration Rules 2021. Rule 44.2 further states that “matters relating to the arbitral proceedings” means the existence of the proceedings, the deliberations of the arbitral tribunal, the pleadings, evidence, and other materials and documents produced in the arbitral proceedings, as well as any award, save where such is in the public domain. This information and documents will remain confidential and cannot be disclosed in subsequent proceedings, unless the relevant exceptions are applicable.

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49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Malaysia

Besides the obligations of an arbitrator that are provided for in the Arbitration Act 2005, for example, an arbitrator is required to be independent and impartial and has a duty to disclose any circumstances that are likely to give rise to justifiable doubts regarding that person’s impartiality or independence, counsel and arbitrators who are also advocates and solicitors of the High Court of Malaya are also subject to ethical codes and professional standards set out in the Legal Profession Act 1976. Further, in practice, the IBA Guidelines on Conflicts of Interest and IBA Guidelines on Party Representation in International Arbitration are often referred to in Malaysia.

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50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Malaysia

Parties are generally free to determine their own practice and procedure in conducting the arbitral proceedings.

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51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Malaysia

The doctrines of maintenance and champerty remain applicable in Malaysia and as such third-party funding agreements are not permitted.

Nonetheless, the AIAC Arbitration Rules 2021 allows for third-party funding to finance a party’s share of the costs of the arbitration so long as it is not precluded by a relevant law or an order of any court of competent jurisdiction (Rule 1.4). The AIAC Rules 2021 also empowers an arbitral tribunal to make necessary enquiries on the existence of third-party funding arrangements and directing the parties to disclose the existence of such arrangements as well as any change in circumstances throughout the course of the arbitral proceedings.

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