LAW 444 - ADR

PRESENTERS:
1. MUHAMMAD IMRAN SHAH B. MISMAN (2016239762)
2. ANDREA TRESS ANAK STALIN JOHNENY (2016239746)
3. NUR HANIS ZULAIKHA BINTI BAKRI (2016421792)
 ASEAN BINTULU FERTILIZER SDN BHD
V
WEKAJAYA SND BHD AND ANOTHER APPEAL
(2017) MLJU 1530

WEE
 PARTIES DISPUTE

Appellant - Asean Bintulu Fertilizer Sdn Bhd (ABF)

Respondent - Wekajaya Sdn Bhd (WSB)

The appellant (ABF) is the employer
while the respondent is the contractor
who was engaged to construct urea
storage building. BRIEF FACTS

Dispute arose between the parties and

the matter was then referred to
arbitration in the year 2003 at a time
Arbitration Act 1952 was in force and
10 issues were submitted before the
arbitrator.

The submission ended in 2009 and the

final award was delivered on
26/12/2014. The dispute was decided
in favour of the respondent, WSB.

Unsatisfied with the decision, the

appellant brought 2 appeals arising
from the same award and was fixed for
hearing on the 19/6/2017. The appeals
are with regards to Section 37 and 42
of Arbitration Act 2005 respectively
 ISSUES
WHETHER THE
APPLICATION OF
APPELLANT TO THE
COURT FOR THE AWARD
TO BE SET ASIDE
PURSUANT TO S.37
SHOULD BE ACCEPTED

WHETHER S.42 ON
QUESTION OF LAW
SHOULD BE THE
REASONS FOR THE
COURT TO SET ASIDE
THE AWARD
 WHETHER THE APPLICATION OF
APPELLANT TO THE COURT FOR THE
AWARD TO BE SET ASIDE PURSUANT
TO S.37 SHOULD BE ACCEPTED
 1. REFUSING TO SETTING ASIDE AWARD DESPITE THE
ARBITRATOR HAD MADE HIS
FINDINGS WITHOUT CREDIBILE EVIDENCE.

Financial Charge: RM 4,631,647.37

There was no evidence to support that Arbitrator was clearly
wrong to hold Respondent is entitled to financial charge nor
Respondent suffered any loss. Since the financial charge is not
based on audited account and no auditor were called as witness to
explain the auditors report,
therefore the financial charge does not make any sense as which
amounts to close amount to
40% of contract value.
 2. REFUSING TO SET ASIDE AWARD DESPITE THERE BEEN A
CLEAR ERRORS MADE B ARBITRATOR AS A
RESULT OF DELAY OF APPROXIMATELY 4 YEARS.

According to KLRCA Arbitrations Rules, an award must be given

within 3 months.
In giving the judgement, no explanation were given by the arbitrator
when he took 4 years from
close submission to issue final award.
Even though, the arbitrator was jointly appointed, it is not fro parties
to remind him to issue
Arbitration award .
If Arbitrator were to be terminated, parties will have to go through
entire process again and this
is TIME CONSUMING + COSTLY.
2. WHETHER S.42 ON QUESTION OF
LAW SHOULD BE THE REASONS
FOR THE COURT TO SET ASIDE
THE AWARD
 1. Whether given that the contract provides a provisional sum for rock excavation
and as to whether the respondent was entitled of the discovery rock

2. Whether as a matter of law if the contract requires a party to inspect the site, can
it derogates its responsibilities by relying on the alleged representations made by
other parties

3. whether if the Arbitration Act 1952 is silent on the issue of the granting of pre-
award interest, does the arbitrator has the power to grant pre-award interest
1. Whether given that the contract provides a provisional sum for rock
excavation and as to whether the respondent was entitled of the
discovery rock

Court failed to consider:-

- Respondent has agreed to excavate the amount of hard rock

based on the unit rates as agreed.
- When Respondent entered into the contract, R was aware that
there was a potential need for to carry out rock excavation but the
amount was unclear.
- R is not entitled for an extension of time for provisional works.
 2. Whether as a matter of law if the contract requires a party to
inspect the site, can it derogates its responsibilities by relying on the
alleged representations made by other parties

Court failed to consider:-

- That there is a specific contractual clause which deals with

the issue of the amount of rock to extract and the applicable
rate, hence the Respondent has no basis to claim that there is
an act of misrepresentations or collateral warranty.

- There is an entire clause in which excludes all the allegations

of misrepresentations or collateral warranty.

- Failure of arbitrator to consider the relationship between the

various relevant clauses in the contract resulted in him
arriving at a conclusion which contradicted with the applicable
law and the terms and agreements between both parties.
3. whether if the Arbitration Act 1952 is silent on the issue of the granting of pre-
award interest, does the arbitrator has the power to grant pre-award interest

The court failed to consider:-

- When the arbitration award was issued, Arbitration Act 1952 was repealed and
inapplicable.

- At the time of issuing the award, the applicable law was that of the Arbitration
Act 2005.
-

-
 JUDGEMENT
As submitted by the learned counsel for the appellant under Section 37, they submitted firstly the 4 years
of delay in delivering the award has compromised the decision making process i.e. there could be
possibilities of misrecollections by the learned arbitrator. Secondly, the delay in delivering the award is
injurious to public good and violates the forums most basic notion of justice, thirdly, the delay in the
award with a pre-award interests had amounted by itself to RM 10.9 million and lastly, despite being an
ad-hoc arbitration, the present Kuala Lumpur Regional Centre for Arbitration (KLRCA) Rules requires the
award to be delivered within 3 months with provisions for extension.

Regarding the liability of arbitrator, there is protection given to arbitrator under Section 47 where to some
extent it gives immunity to the arbitrator for misconduct thus arbitrator in Malaysia is a protected species
and his conduct in arbitration proceedings in a limited sense cannot be challenged unless bad faith can
be established. It will be within the province of the court and that cannot be done in an application for
setting aside of the award unless if it shown that the delay has in actual fact compromised the decision
making process of the arbitrator warranting the court to intervene based on public policy. In addition to
that, the Model Law concept also leans in favour of the arbitrator whereby the lack of provision for
disciplinary tribunal and any form of misconduct during the arbitral process may not be strictly within the
purview of the court once the award is made. Misconduct of arbitrators also have not yet been provided in
Arbitration Act 2005.

Thus, the learned judge had taken into consideration the delay point and had censored the learned
arbitrator. Upon curial scrutiny of the complaint in section 37 as well as section 42 to sustain the award,
the appellant did not suffer any material prejudice. Despite the pre-award interest looking unjust it
however being loss for use of money for the respondent at the market rate cannot be unjust or abhorrent
to the notions of justice to seek court intervention in a party autonomy concept as well as in light of
Section 36 AA 2015 which places a higher threshold where award made by arbitral tribunal pursuant to
an arbitration agreement shall be final and binding on parties. Section 42 on the other hand is redundant
as it requires a high threshold to be applied.

In conclusion, both the appeals are dismissed with costs, subject to payment of allocated fees. Deposits
are to to be refunded.