1. Governed by Section 37 of the Arbitration Act 2005
Section 37(1)-(3) of the Arbitration Act (“AA”) 2005 provides as follows:
“(1) An award may be set aside by the High Court only if—
(a) the party making the application provides proof that—
(i) a party to the arbitration agreement was under any incapacity;
(ii) 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;
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
(v) subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or
(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or
(b) the High Court finds that—
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
(2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the public policy of Malaysia where—
(a) the making of the award was induced or affected by fraud or corruption; or
(b) a breach of the rules of natural justice occurred—
(i) during the arbitral proceedings; or
(ii) in connection with the making of the award.
(3) Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside.”
The ‘severing’ provision in Section 37(3) of the AA 2005 is only applicable in cases where the Award is successfully challenged on the basis of Section 37(1)(a)(v) of the AA 2005.[1]
2. As a general rule, applications have to be filed within 90 days
Section 37(4) of the AA 2005 stipulates that:
“An application for setting aside may not be made after the expiry of ninety days from the date on which the party making the application had received the award or, if a request has been made under section 35, from the date on which that request had been disposed of by the arbitral tribunal.”
The exception would be where “the award was induced or affected by fraud or corruption.”[2] In such cases, the 90 days deadline would not apply.
3. Applications are by way of Originating Summons supported by affidavit
Section 50 of the AA 2005 provides the procedure for applications to the High Court:
“Any application to the High Court under this Act shall be by an originating summons as provided in the Rules of the High Court 1980”
The procedure for such applications are also prescribed in Order 69 Rule 5(3) and (4) of the Rules of Court 2012:
“(3) In every application to set aside an award, the originating summons shall, in addition to matters stated in rule 4(1)—
(a) give details of the award challenged;
(b) identify which part or parts of the award are challenged; and
(c) specify the grounds for the challenge.
(4) The applicant shall file by affidavit, written evidence on which he intends to rely when he files his writ, including a copy of the arbitration agreement and the award.” [Bold and underline ours]
4. Courts should be slow to set aside an arbitral award
This was made clear by the Federal Court in Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413:
“The court must evaluate the nature and impact of the particular breach in deciding whether the award should be set aside under s 37. The court must also consider the background policy of encouraging arbitral finality and minimalist intervention approach to be adopted in line with the spirit of UNCITRAL Model Law. The effect of ss 8, 9, 37 and 42 of the AA 2005 is that the court should be slow in interfering with or setting aside an arbitral award. The court must always be reminded that constant interference of arbitral award will defeat the spirit of the AA 2005 which for all intent and purposes, is to promote one-stop adjudication in line with the international practice.”[3] (Bold and underline ours)
5. Applications can be adjourned where appropriate
Section 37(6) of the AA 2005 provides for this:
“On an application under subsection (1) the High Court may, where appropriate and so requested by a party, adjourn the proceedings for such period of time as it may determine in order to allow the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.”
6. Money payable under the Award can be secured pending the determination of the application
Section 37(7) of the AA 2005 enables the High Court to do this:
“Where an application is made to set aside an award, the High Court may order that any money made payable by the award shall be brought into the High Court or otherwise secured pending the determination of the application.”
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[1] See Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and another case [2015] 11 MLJ 841 (HC), a decision of Mary Lim J (later FCJ) at paras 29-30
[2] Section 37(5) of the Arbitration Act 2005
[3] Jan De Nul (M) Sdn Bhd & Anor v Vincent Tan Chee Yioun & Anor [2019] 2 MLJ 413 (FC), at para 57