Judicial Approach To Application And Construction Of Arbitration Act 2005 In Malaysia: Section 8

• Published date: 06 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Cecil Abraham & Partners
• Author: Mr Tan Sri Dato' Cecil W. M. Abraham, Dato' Sunil Abraham and Anne Sangeetha Sebastian

Over the past few decades, Malaysia has sought to develop a refined and efficient system for alternative dispute resolution. Today, Malaysia has a relatively robust arbitration ecosystem. This article is part of a series that considers how the courts in Malaysia have construed and interpreted sections 8, 37 and 42 of the Arbitration Act 2005 (the 2005 Act) and, in particular, focuses on the judicial approach to minimal court intervention set out in section 8.¹

Party autonomy

The courts recognise that party autonomy is the hallmark of arbitration. This principle was given statutory force by way of the original wording of section 8 of the 2005 Act, which was based on article 5 of the United Nations Commission of International Trade Law (UNCITRAL) Model Law (the Model Law). Section 8 was initially worded as follows: "Unless otherwise provided no Court shall intervene in any of the matters governed by this Act."

This section was construed by Madam Justice Mary Lim (as she then was) in AV Asia Sdn Bhd v Pengarah Kuala Lumpur Regional Centre for Arbitration & Anor,² in the following manner:

[I]t is quite evident that the role of the court has been spelled out early in s. 8 [of the 2005 Act] which provides that: Unless otherwise provided, no Court shall intervene in any of the matters governed by this Act.

[11] This is intentional and deliberate. This reflects the policy and general principle of non-intervention; respecting party autonomy, and protecting parties who have chosen arbitration from unnecessary delay and expense. This provision shows support for arbitration.

The current section 8 of the 2005 Act was amended in 2011 in the following manner: "No Court shall intervene in matters governed by this Act except where so provided in this Act."

The Federal Court in Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Restam Melayu Pahang and other appeals³ construed section 8 of the 2005 Act in the following manner:-

The AA 2005 is devoid of a provision in the words of s 81(2) of the UK Arbitration Act 1996. But the AA 2005 is nonetheless clear that 'No court shall intervene in matters governed by this Act, except where so provided in this Act'. Pertinent to 'where so provided in this Act', the AA 2005 provides for court intervention in the matters stated in ss 10, 11, 13(7), 15(3), 18(8), 29, 37, 41, 42, 44(1), 44(4), 45, and 46 of the AA 2005. 'Where a party seeks intervention is one of those situations, the court is permitted to intervene only in the manner prescribed by the model law, and in the absence of any express provision the court must not intervene at all . . . .

But '... in situations expressly regulated by the Act, the courts should only intervene where so provided in the Act ...' (LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal [2012] SGCA 57 per Sundaresh Menon JA, as he then was, delivering the judgment of the court). Since the setting aside of an award is a matter governed by the AA 2005, the court is permitted to set aside an award only in manner prescribed by the AA 2005. The court is not permitted to set aside an award in manner not prescribed by the AA 2005.

Other decisions of the Federal Court of Malaysia, the Court of Appeal of Malaysia and the High Court of Malaya⁴ also recognise the principle of party autonomy and the concept of non-intervention by the courts as embodied in section 8 of the 2005 Act. The purpose of enacting section 8 of the 2005 Act was to ensure that the...