MALAYSIAN HIGH COURT CONSIDERS THE LEGALITY OF AN UNDERLYING CONTRACT WHICH WAS THE SUBJECT OF ARBITRATION

In Calibre M&E Sdn Bhd v PT Cooline HVAC Engineering (Originating Summons Nos. WA-24C(ARB)-47-09/2017 and WA-24C(ARB)-49-10/2017), the Malaysian High Court  considered an application to set aside an arbitral award on the basis that the recognition by the tribunal of the allegedly illegal underlying contract was in conflict with the public policy of Malaysia.  Section 37 of Malaysia’s Arbitration Act 2005 (“Act“) (which is modelled after the Article 34 of the UNCITRAL Model Law on International Commercial Arbitration 1985 (as amended in 2006)) allows an award to be set aside on the basis that the award is in conflict with the public policy of Malaysia.

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THE APPLICABILITY OF MALAYSIA’S FEDERAL COURT RULING ON THE AUTHORITY OF SHARIAH ADVISORY COUNCIL IN CIVIL DISPUTES TO ARBITRATIONS ON ISLAMIC FINANCE AND CAPITAL MARKETS

The Central Bank of Malaysia Act 2009 (“Act“) designated Malaysia’s Shariah Advisory Committee on Islamic finance (“SAC“) as the authority for ascertaining Islamic law for the purposes of Islamic financial business. According to Section 2 of the Act, “Islamic financial business” encompasses “any financial business in ringgit or other currency which is subject to the laws enforced by the Bank and consistent with the Shariah“.

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Malaysia’s High Court rules that third parties are not prohibited from disclosing confidential documents produced in arbitration proceedings

In Dato’ Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd [2019] MLJU 405, the High Court considered for the first time the new section 41A of Malaysia’s Arbitration Act 2005 (“Arbitration Act“), and its application to non-parties to an arbitration.

Background

In the context of a shareholders’ dispute, the plaintiff-director of the defendant company applied for leave to commence derivative proceedings against the defendant company. The defendant company objected to the production of two documents annexed to the plaintiff’s affidavit supporting the application. These documents were originally produced for the purpose of arbitration proceedings between the defendant company and its corporate shareholders, Nautical Supreme Sdn Bhd (to which the plaintiff is a director) and Azimuth Marine Sdn Bhd.

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MALAYSIAN COURT OF APPEAL CONSIDERS INJUNCTIONS TO RESTRAIN THE CALLING OF PERFORMANCE BONDS IN SUPPORT OF ARBITRATION

In the first half of 2019, Malaysia’s Court of Appeal considered no less than four appeals relating to applications to restrain the calling of performance bonds in the construction sector. These applications were made in support of arbitration under Section 11(1)(f) and (h) of the Malaysian Arbitration Act 2005 (“Act”) (prior to its amendments in 2018), which reads:

“11 Arbitration agreement and interim measures by High Court
(1) A party may, before or during arbitral proceedings, apply to a High Court for any interim measure and the High Court may make the following orders for:

(f) the preservation, interim custody or sale of any property which is the subject-matter of the dispute;

(h) an interim injunction or any other interim measures”

We briefly consider the four decisions of the Court of Appeal where the injunction sought to restrain the call on a performance bond was based on unconscionability,[1] and the practical considerations arising from the Malaysian courts’ treatment of such applications.

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MALAYSIAN APEX COURT DECIDES ON ARBITRABILITY OF DISPUTES INVOLVING A REMEDY OF STATUTORY FORECLOSURE, AND THE INCORPORATION OF ARBITRATION CLAUSES IN MULTI-CONTRACT TRANSACTIONS WHERE ONE CONTRACT CONTAINS AN ENTIRE AGREEMENT CLAUSE

Earlier this year, it was reported that the Malaysian Federal Court on 29 January 2018 decided an application to stay statutory foreclosure proceedings pursuant to a registered security granted over a parcel of land on the basis that the underlying dispute is subject to arbitration in Singapore.  The Federal Court made a ruling with potentially wide-ranging repercussions in the context of the scope of disputes considered arbitrable in Malaysia on the grounds of public policy, and the incorporation of arbitration clauses in multi-contract transactions.

In this post, we consider the decision of the Federal Court in Arch Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 1 CLJ 305 (“Arch Reinsurance“), its relation to its other apex decisions on arbitration, and its implication for arbitration in Malaysia.

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ICC STRIVES FOR GREATER TRANSPARENCY AND EFFICIENCY IN UPDATED PRACTICE NOTE TO PARTIES AND ARBITRAL TRIBUNALS ON THE CONDUCT OF ARBITRATION UNDER THE ICC RULES

On 20 December 2018, the International Court of Arbitration of the International Chamber of Commerce (ICC) published updated guidance on the conduct of arbitration under its arbitration rules. The Note to Parties and Arbitral Tribunals on the Conduct of Arbitration under the ICC Rules of Arbitration (Note) entered into force on 1 January 2019, and represents a continuation of the ICC’s efforts to increase transparency and efficiency, and widen its range of services to users.  We consider six of the most significant updates to the Note below.

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