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| Issue No: | 33 |
|---|---|
| Published: | Summer 2006 |
| Article No: | 2 |
| Author: | The Chin Huat |
| Title: | International Arbitrations in Malaysia |
The Malaysian Arbitration Act 2005 came into force on 15th March 2006. It incorporates the UNCITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration and is modelled upon the New Zealand Arbitration Act 1996, particularly in structuring domestic and international arbitration regimes. The UNCITRAL Model Law is designed to meet the need for improvement and harmonization between national laws which are often found inadequate in dealing with international cases. The Model Law also adopts the relevant provisions of the 1958 New York Convention on the recognition and enforcement of international awards. This article by Teh Chin Huat describes the salient points which are different from the UNCITRAL Model Law in the context of international arbitration.
The Malaysian Arbitration Act is in four parts:
Part I: Preliminary. This part contains five general sections which deal with commencement, interpretation, application to arbitration and awards in Malaysia, arbitrability of subject matter and the applicability of the Act to Government Departments.
Part II: Arbitration. This part contains 33 sections and generally follows Articles 3 to 36 of the UNCITRAL Model Law. This part deals with general provisions such as communications, waiver of court intervention, the arbitration agreement, composition and jurisdiction of arbitral tribunal; their conduct of arbitral proceedings, making and enforcement of awards.
Part III: Additional provisions relating to arbitration. This contains 7 sections which are not found in the UNCITRAL Model Law and only apply to domestic arbitrations unless the parties agree otherwise. It deals with additional powers to supervise and/or support arbitration proceedings, determination of preliminary points of law, appeals on questions of law and costs and expenses of an arbitration.
Part IV: Miscellaneous. This has five sections which deal with various matters such as liability of the arbitrator and immunity of arbitral institutions.
The Act defines 'international arbitration' closely to Article 3 of the UNCITRAL Model Law and any arbitration which is not an international arbitration is deemed to be domestic arbitration.Parts I, II and IV are applicable to international arbitration with the seat in Malaysia and Part III will only apply if the parties agree. For domestic arbitration, all four parts apply unless the parties agree that Part III is not applicable. The Act has thus structured neatly domestic and international arbitrations.
The Roles of Malaysian Courts
Adopting Article 5 of the UNCITRAL Model Law, the Malaysian Arbitration Act provides that no court shall intervene in any of the matters governed by the Act unless otherwise provided. The 'otherwise provided' matters include stay of proceeding, appointment of arbitrator(s), challenges to arbitrator(s), arbitrator's jurisdiction and scope of authority, assistance in the taking of evidence, setting aside of awards and recognition and enforcement of awards.
The Roles of Kuala Lumpur Regional Centre for Arbitration
In line with Article 6 of the UNCITRAL Model Law, the Arbitration Act provides that KLRCA is the appointing authority. In the event that the parties fail to agree on the appointment of an arbitrator or the presiding arbitrator in the case of three arbitrators, then a party can apply to KLRCA to make such appointment. The party 'may' also request KLRCA to take the necessary measure for securing an appointment when the agreed procedure of appointment is not adhered to by the other party or not performed by the relevant institution in an administered arbitration.
Place of Arbitration
Article 1 (2) of UNCITRAL Model Law empowers the court to stay proceedings, grant interim measures, recognise and enforce or refuse to enforce international arbitration awards regardless of the place of arbitration. The Malaysian regime of international arbitration has created a vacuum for those arbitrations that take place outside Malaysia. This has occured by virtue of section 3 of the Act, however, qualifying the application of the Act to international arbitration with the seat in Malaysia and making no provisions for those held outside Malaysia and having repealed the New York Convention Act 1985 in its entirety. This could not have been conceivably intended by the legislature having regards to the fact that Malaysia is the Contracting State. Otherwise, it is difficult to see how Malaysia is able discharge the treaty obligations.
The Act is a major effort in modernising Malaysian arbitration law and creating an international arbitration friendly environment while fulfilling the Convention obligations. Such a move is very much applauded although it appears that the Act is currently under amendment for improvement.