Legal Update 5 of 2018

CASE

ASEAN BINTULU FERTILIZER SDN BHD v. WEKAJAYA SDN BHD & ANOTHER APPEAL [2018] 2 CLJ 257

ISSUE

Can an arbitrator’s award be set aside on the grounds that it took too long for the arbitrator the deliver his decision?

BRIEF FACTS

  • ABF was the employer and Wekajaya was the contractor who was engaged to construct a urea storage building.
  • A dispute arose between the parties and the matter was referred to arbitration in the year 2003.
  • The final award which was delivered on 26 December 2014 was in favour of Wekajaya.
  • Dissatisfied with the final award, ABF applied to the High Court to set it aside on the ground of public policy in that the arbitrator had taken four years to hand down his award after the completion of the arbitration.
  • The High Court also decided in favour of the Wekajaya and hence, these appeals.
  • ABF argued that;
    • the four years delay in delivering the award had compromised the decision-making process;
    • the delay in delivering the award was injurious to public good and violated the forum's most basic notion of justice;
    • the delay in the award with a pre-award interests had amounted by itself to RM10.9 million; and
  • Even though it was an ad hoc arbitration, the present Kuala Lumpur Regional Centre for Arbitration ('KLRCA') Rules requires the award to be delivered within three months with provisions for extension.

DECISION: Appeal dismissed 

  • The award was not set aside by the Court of Appeal.
  • The arbitrator in Malaysia is protected and his conduct in arbitration proceedings, in a limited sense, cannot be challenged unless bad faith can be established.
  • A setting aside of the award on grounds of delay alone can only be done if it can be demonstrated that the delay has, in actual fact, compromised the decision-making process. Here there was no such evidence.
  • The award of pre-award interest was modified to take into account the delay in handing down the award.
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