Challenges against arbitral awards in Malaysia

Abstract

The purpose of this study is to investigate the advantages and disadvantages of having arbitration as compared to court litigation for the purposes of challenging and enforcing the arbitral award and provisions in the Arbitration Act 2005 as interpreted by the Courts in respect of certain grounds to challenge an arbitral award. Arbitration Act 2005 (Act 646) was passed and became law on 15 March 2006 by virtue of Gazette P.U. (B) 65/2006 replacing the old Arbitration Act 1952 (Act 93) is the Act of Parliament which governs the law of arbitration in Malaysia, for both domestic arbitration and international arbitration. Malaysia is unlike Singapore, where it has different Acts of Parliament separately governing each of domestic arbitration and international arbitration. The Act 646 was based on the Model Law on International Commercial Arbitration, which was adopted by the United Nations Commission on International Trade Laws (UNCITRAL) on 21 June 1995 but with certain exceptions and modifications. However, since the Act became effective, there are numerous local cases decided by the High Court and Court of Appeal in respect of the approaches governing Section 37 and Section 42 of Arbitration Act 2005. Section 42 is not part of Model Law. There are conflicting approaches by the High Court and Court of Appeal on the test to be applicable as to when an arbitral award can be challenged on reference on a question of law. It is only until recently (more than 10 years since the Arbitration Act 2005 was enacted) that the Federal Court in Far East Holdings Bhd v Majlis Ugama Islam dan Adat Resam Melayu Pahang appears to settle the law on Section 42 and other issues.