MALAYSIA: HIGH COURT DECLINES TO STAY ARBITRATION PROCEEDINGS ON THE BASIS OF A NON-SIGNATORY’S ALLEGATION OF BRIBERY AND CORRUPTION UNDERLYING THE CONTRACT

In Vertex Superieur Sdn Bhd & Anor v Shell Malaysia Trading Sdn Bhd (Civil Suit No. BA-22C-5-03/2020), the Malaysian High Court refused to stay court proceedings brought in breach of an arbitration agreement on the basis that it was in the public interest that allegations by a non-signatory that an underlying contract was procured by private bribery and corruption should be tried expeditiously through court proceedings. While the case is indicative of how bribery and corruption allegations brought by a related but non-signatory party to an arbitration agreement would be treated in Malaysian courts, it highlights the need for a more sophisticated approach in dealing with these nuanced but increasingly common issues in arbitration.

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Malaysian Federal Court provides guidance on identifying place of arbitration in Malaysia for the purpose of determining the supervisory court of the arbitration

In Masenang Sdn Bhd v Sabanilam Enterprise Sdn Bhd (Civil Federal Court Civil Appeal No.: 02(i)-20-03/2020(S)), the Federal Court held that the courts of first instance of the place specified as the seat of arbitration in Malaysia has exclusive supervisory jurisdiction over arbitrations seated in that place, including any award arising from such proceedings. In this respect, a court of a state in Malaysia which is not the court of the place specified as seat of arbitration will have no supervisory jurisdiction over that arbitration or its award. As a result, parties seeking to have their arbitrations seated in Malaysia will need to identify specifically a local state or city in Malaysia as the seat of arbitration.

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LAUNCH OF AIAC ARBITRATION RULES 2021

The Asian International Arbitration Centre has launched the latest revisions to its Arbitration Rules, following their last update in 2018. Upon coming into effect on 1 August 2021, the AIAC Arbitration Rules 2021 will apply to all AIAC arbitrations commenced after this date, unless parties agree otherwise. The 2021 revisions come following an extensive study by an international External Advisory Committee for the Revision of the AIAC Arbitration Rules (including Peter Godwin, Partner, HSF Kuala Lumpur) and a public consultation of the draft rules.

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MALAYSIA: HIGH COURT ISSUES ANTI-ARBITRATION INJUNCTION AGAINST LONDON ARBITRATION AND REJECTS PARALLEL APPLICATION TO STAY COURT PROCEEDINGS

In MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd (Admiralty in Personam No. WA-27NCC-46-05/2020), the Malaysian High Court issued an anti-arbitration injunction to halt a London-seated arbitration on the grounds that the arbitration proceedings were in breach of an exclusive jurisdiction clause in favour of the Malaysian courts. The decision confirms the power of Malaysian courts to restrain a foreign-seated arbitration where the court takes the view that it has jurisdiction over the dispute, and provides guidance on the circumstances in which a Malaysian court will exercise this power.

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MALAYSIA: HIGH COURT APPLIES HALLIBURTON V CHUBB ON ARBITRATOR APPARENT BIAS AND THE DUTY OF DISCLOSURE

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 (Originating Summons Nos. BA-24C(ARB)-4-05/2020 and BA-24C-87-09/2020), the High Court allowed an application to set aside an award on the basis that (i) arbitrator apparent bias resulted in the award being in conflict with the public policy of Malaysia, and (ii) a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award (section 37(1)(b)(ii) and (2)(b)(i) of Malaysia’s Arbitration Act 2005 (the Malaysian Act)). In doing so, it provided valuable insight into how the principles on arbitrator bias and an arbitrator’s duty of disclosure as recently restated by the UK Supreme Court in Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48 (Halliburton) (discussed in our blog post here) are applied in Malaysia.

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2019 caseload statistics show continued demand for arbitration by Malaysian parties

Last year, we examined the caseload statistics of various arbitral institutions with the aim of providing an empirical perspective on the participation of Malaysian parties in institutional arbitration over recent years. This was done by reference to published caseload statistics of various arbitral institutions across the globe starting from a mean year of 2015 and ending in 2018. This year, we continue to trace the trend of Malaysian involvement and usage of arbitration based on published statistics of these major arbitral institutions.

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AIAC receives a Director after eight month vacancy

On 16 November 2020, Minister in the Prime Minister’s Department announced that former Malaysian federal court judge, Tan Sri Suriyadi Halim Omar, has been appointed Director of the Kuala Lumpur-based Asian International Arbitration Centre (AIAC) effective 1 December 2020. The third former judge to take this office and the first in 13 years, Suriyadi will be filling a vacancy left in the AIAC following the passing of Mr Vinayak Pradhan in March this year.

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MALAYSIA: HIGH COURT FINDS THAT ARBITRAL TRIBUNAL HAS JURISDICTION TO DETERMINE INSOLVENCY SET-OFF

In UDA Land Sdn Bhd v Puncak Sepakat Sdn Bhd [2020] MLJU 892, the High Court was required to determine whether an award should be set aside because the sole arbitrator (“Arbitrator”) wrongly concluded that it had no jurisdiction to determine a counterclaim and insolvency set-off raised in the arbitration. The High Court set aside the award on the basis that the Arbitrator made an error of law in finding that it had no jurisdiction to hear the counterclaim and set-off.

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MALAYSIA: COURT OF APPEAL REFUSES STAY OF PROCEEDINGS WHERE PARTY ACTS INCONSISTENTLY WITH AN EXPRESS RESERVATION OF RIGHT TO REFER DISPUTE TO ARBITRATION

On 10 June 2020, the Court of Appeal in Yeo Eng Lam v Infinity Vantage Sdn Bhd (Civil Appeal No. N-02(IM)(NCvC)-507-03/2018, Court of Appeal considered whether an express reservation of a right to refer a dispute to arbitration in a defence and counterclaim pleading was effective to preserve a right to elect to arbitrate a dispute wrongly commenced in court. The court also considered whether an application to disqualify solicitors in the disputed court proceedings amounts to a step in the proceedings which would preclude a party from staying the court proceedings in favour of arbitration.

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