A Hard Act to Follow

Which Arbitration Act applies to arbitration proceedings that arise from an arbitration agreement made before 15 March 2006?  Ashok Kumar provides the answer

 

 

INTRODUCTION

The Arbitration Act 2005 (“AA 2005”) which is based on the UNCITRAL Model Law came into force in Malaysia on 15 March 2006. This was a welcome change as it brought Malaysia in line with many other countries which have adopted the UNCITRAL Model law as the basis for drafting their own national law with regards to arbitration.

 

In determining whether the Arbitration Act 1952 (“AA 1952”) or AA 2005 is applicable, section 51 of the AA 2005 is a reference point. Section 51 reads:

 

51. Repeal and savings

 

(1) The Arbitration Act 1952 and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985 are repealed.

 

(2) Where the arbitral proceedings were commenced before the coming into operation of this Act, the law governing the arbitration agreement and the arbitral proceedings shall be the law which would have applied as if this Act had not been enacted.

 

(3) Nothing in this Act shall affect any proceedings relating to arbitration … commenced in any court before the coming into operation of this Act.

 

It appears from a reading of this section that the AA 1952 will be applicable only when the arbitral proceedings were commenced before the coming into operation of AA 2005 (i.e. 15 March 2006).

 

 

PUTRAJAYA HOLDINGS SDN BHD v DIGITAL GREEN SDN BHD [2008] 7 MLJ 757

 

In February 2008, His Lordship Ramly Ali, J decided in this case that an arbitration even if commenced today, may fall within the ambit of the AA 1952.

 

The basis for His Lordship's decision is set out below.

 

 

The Arbitration Clause

It is pertinent to produce the arbitration clause which was the subject matter in this case:

 

Clause 63.1

 

(a) if any dispute or difference shall arise between the Employer and the Contractor … then such dispute or difference shall be referred to the ER for a decision.

 

(b) …..

 

(c) if the ER fails to give a decision … or if the Contractor be dissatisfied with any decision … then the Contractor may require that such dispute or difference be referred to arbitration …

 

 

Clause 63.5

 

In (these) Conditions, “reference” shall be deemed to be reference to arbitration within the meaning of the Arbitration Act 1952 (Revised – 1972).

 

The above arbitration agreement was entered into between the parties on 12 August 2002, well before the coming into force of the AA 2005. The Learned Judge held that the words “…‘referenceshall be deemed …” in Clause 63.5 clearly showed the intention of the parties to the arbitration agreement that the applicable statute to regulate matters pertaining to arbitration is the AA 1952.

 

The Learned Judge when deciphering the intention of the parties also referred to Barclays Bank Ltd v Inland Revenue Commissioners [1961] AC 509 (HL) where it was held that the primary function of the word “deemed” is to bring in something which would otherwise be excluded.

 

 

The Bahasa Malaysia version of AA 2005


The Bahasa Malaysia version of Section 51(2) reads:

Jika perjanjian timbangtara dibuat atau prosiding timbangtara dimulakan sebelum permulaan kuat kuasa Akta ini, undang-undang yang mengawal perjanjian timbangtara dan prosiding timbangtara itu adalah undang-undang yang sepatutnya terpakai seolah-olah Akta ini tidak diperbuat.

 

 

The translation reads:

"Where the arbitration agreement was made or the arbitral proceedings were commenced before the coming into operation of this Act, the law governing the arbitration agreement and the arbitral proceedings shall be the law which would have applied as if this Act has not been enacted." (emphasis added)

 

When this direct translation of the Bahasa Malaysia version is compared with the English Language version of the AA 2005, it is clear that the words at the beginning of this sub-section “… the arbitration agreement was made or …” have been omitted from the English Language version.

 

The Learned Judge observed that "it was unfortunate that the draftsman, in translating the 2005 Act from its Bahasa Malaysia text, Akta Timbangtara 2005 to the 2005 Act in its English text, had, omitted the words ‘jika perjanjian timbangtara dibuat/where the arbitration agreement was made’ at the beginning of the provision in s 51(2) of the 2005 in its English text."

 

 

The Judge referred to P.U.(B) 61/2006 which reads as follows:

“In exercise of the powers conferred on the Yang di-Pertuan Agong by section 6 of the National Language Acts 1963/67 [Act 32], and delegated to the Prime Minister under P.U. 33/68, the Prime Minister prescribes that the authoritative text of the Arbitration Act 2005 [Act 646] and any subsidiary legislation made under it is the text in the English language.”

 

Although the Learned Judge acknowledged that the authoritative text of the AA 2005 is the English text by virtue of P.U.(B) 61/2006, he held that for the purpose of interpreting the provisions of the Act and to determine the intention of Parliament and applying the purposive rule of interpretation, a reference must also be made to the Bahasa Malaysia text which was tabled and debated in both houses of Parliament.

 

 

Ramly, J further held that:

“If certain words, sentences or paragraphs are omitted in the English text of a statute, the omission of which will make the provisions in the statute absurd or incomprehensible or does not truly manifest the intention of Parliament, the court must, refer to the Malay Language text of the statute, and if the omitted words, sentences or paragraphs in the English text are present in the Malay Language text, then the court must supplement that words, sentences or paragraphs in interpreting the statute in the English text to be able to manifest the intention of Parliament.”

 

 

CONFLICTING DECISION

In the case of Majlis Ugama Islam dan Adat Resam Melayu Pahang v Far East Holdings Bhd & Anor [2007] 10 CLJ 318 (HC), the Learned Judicial Commissioner held that although the arbitration clause referred to the AA 1952, the applicable Act is the AA 2005 - the reason being that Section 51 of AA 2005 provides for the repeal of the AA 1952.

 

Further, it was also provided in the same section that where arbitral proceedings were commenced after the coming into operation of the AA 2005, the AA 2005 would be the applicable Act.

 

 

CONCLUSION

The extent of the repercussions of the decision in Putrajaya Holdings Sdn Bhd v Digital Green Sdn Bhd remains unclear.

 

Important factors which may distinguish this case from others are first, the significance of the words “shall be deemed” in Clause 63.5. Second, the fact that the arbitration clause did not contain the usual provision which takes into account the effect of amendments or re-enactments of existing legislation.

 

However, if the Learned Judge is correct in his ruling that the words “… the arbitration agreement was made or …” which were included in the Bahasa Malaysia version of the AA 2005 but omitted from the English Language version are to be taken into account in determining the intention of Parliament (notwithstanding that the English Language version is the authoritative text), then whether or not an arbitration agreement made before March 2006 provides for possible statutory modifications or re-enactments may be of no assistance.

 

It is hoped that Parliament will amend either the English Language or Bahasa Malaysia version of the AA 2005 to remove the inconsistency in the legislation.

 

 

ASHOK KUMAR MAHADEV RANAI ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 
ACCOLADES & AWARDS

Skrine Retains Who’s Who Legal Accolade for Malaysia

On 15th May 2017, the Who’s Who Global Awards was held in London, United Kingdom and Skrine was conferred the Award:

Malaysia Law Firm of the Year 2017

Skrine previously received this Award in 2013, 2014, 2015 and 2016.

>> READ MORE

SKRINE Clinches Top Honours at ALB Malaysia Law Awards 2017

On 6th April 2017, the Asian Legal Business Malaysia Law Awards was held and SKRINE was named

Malaysia Law Firm of the Year 2017

SKRINE also bagged 5 other awards

>> READ MORE

Asialaw Profiles 2017

The Asialaw Profiles has ranked Skrine as Outstanding Firm and particularly highlighting the following practice areas:

Outstanding Firm

  • Competition & Antitrust
  • Corporate/M&A
  • Dispute Resolution
  • Energy & Natural Resources
  • Intellectual Property
  • IT, Telco & Media
  • Project & Infrastructure

>> READ MORE

PDPA NOTICE

English | Bahasa Malaysia