Court Rules On Whether Arbitration Award Can Be Partially Set Aside And Whether Objection To Arbitrators Appointment Was Afterthought

• Law Firm: Gan Partnership
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Ms Tasha Lim Yi Chien
• Published date: 17 February 2023

Introduction

In Persatuan Kanak-Kanak Spastik Selangor & Wilayah Persekutuan, the Court of Appeal¹ decided on two important issues that impact the arbitration scene in Malaysia. The issues before the Court of Appeal were:

• whether the High Court judge had erred in coming to its decisions in setting aside the whole arbitration award pursuant to section 37(1) of the Arbitration Act 2005 (AA) upon deeming that section 37(3) of the AA was not applicable; and
• whether the arbitrator had indeed breached public policy by not making a full and timely disclosure of his relationship with the witness.

Facts

Persatuan Kanak-Kanak Spastik Selangor dan Wilayah Persekutuan (the association) appointed Mr Low Koh Hwa of Low Kok Hwa (Low), a registered architect who practises as a sole proprietor, to provide architectural consultancy services for the redevelopment of a building of the association in Petaling Jaya, Selangor.

Low claimed that he had completed the services but that the association had failed to pay his fee of 485,269.33 Malaysian ringgit . Low's claim against the association was referred to arbitration before a sole arbitrator, Mr Akbal Singh Sandhu (the arbitrator).

On 12 February 2020, the arbitrator announced his final arbitration award, which favoured the association. The award, among other things, found that:

• Low was only entitled to claim a sum of 747,250 Malaysian ringgit for his services;
• Low was estopped from claiming any professional fees in excess of the 747,250 Malaysian ringgit; and
• the association had overpaid a sum of 72,750 Malaysian ringgit to Low, which he had to refund.

High Court

Following this award, Low filed an action in the High Court to set aside the award pursuant to section 37(1) of the AA.

The Court allowed the application and set aside the whole award. Among other things, the Court found the following.

• The award for "overpayment" and "interest on overpayment" was not within the parties' submission to arbitration and, therefore, had breached section 37(1)(a)(iv) of the AA, as the award dealt with a dispute not contemplated by the parties.
• Section 37(3) of the AA, which stipulates that part of the award which contains decisions on matters not within parties' submission may be set aside, was found to be inapplicable as the award for overpayment was inseverable from the rest of the award.
• The arbitrator had failed to make full and timely disclosure of his relationship with the association's witness before the commencement of the...