In Dato’ Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd  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.
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.
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, and the practical considerations arising from the Malaysian courts’ treatment of such applications.
In its recent decision in Union of India v Hardy Exploration and Production (available here), the Supreme Court of India found that a contractual clause stipulating Kuala Lumpur as the ‘venue’ of arbitration did not amount to a choice of juridical seat. While the Indian courts’ jurisdiction to hear set-aside applications will be excluded if the seat of the arbitration is outside India, the Supreme Court found that in this case there was no chosen seat (and the tribunal had not determined a seat), notwithstanding the choice of Kuala Lumpur as the venue for the arbitral proceedings, and the fact that the award was signed in Kuala Lumpur. Since this was a case where the arbitration agreement pre-dated 6 September 2012 (the date of the key Supreme Court ruling in BALCO), it appears that the Court did not find it necessary to positively determine that the seat was in India; the fact that an overseas seat had not been established appears to have been sufficient for the Indian courts to have jurisdiction to hear the application.