Hiccups in Enforcing Foreign Arbitral Awards

Sri Lanka Cricket v. World Sport Nimbus Pte Ltd [2006] 3 MlJ 117

 

 

Introduction

 

In the above captioned case, the respondent, World Sport Nimbus (“WSN”) secured an award in an arbitration against the appellant, Sri Lanka Cricket (“SLC”) held in Singapore. The High Court (“HC”) allowed WSN’s attempt to enforce the award in Malaysia. However, upon appeal to the Court of Appeal (“CA”) the HC’s decision was set-aside by reason of the fact that there was no Gazette Notification declaring Singapore as party to the New York Convention (“the said Convention”).

 


 

Rationale of the CA’s decision

 

The rationale of the CA’s decision was based on sec. 2(2) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985 (“the Act”) which provides that:-


 

The Yang Di Pertuan Agong (“the Agong”) may, by order in the Gazette, declare that any State specified in the order is a party to the said Convention, and that order shall, while in force, be conclusive evidence that that State is a party to the said Convention.


 

The CA held that although the word “may” is used in the Act, the interpretation of it should be mandatory when read in the context of the said provision and the whole Act. The CA held that if the Agong wishes to extend the benefit of the summary method of enforcement provided by sec. 3(1) of the Act to a particular award then it is logical that he must by Gazette Notification declare the country in which that award was made to be a party to the said Convention. If the Agong elects not to do so, then the benefit of the Act is not available to the party seeking enforcement.


 

The CA referred to the Indian case of Kali Pada Chowdury v. Union of India AIR [1963] SC 134 and GP Singh’s Principles of Statutory Interpretation (9th Ed) and held that the right to enforce a convention award pursuant to sec. 4(1) of the Act is therefore a benefit that WSN would not but for the Act have. Hence the requirement of gazetting a country as a party to the said Convention must have been intended by Parliament to be mandatory in effect.

 


 

Implications of the decision

 

In light of the decision, holders of foreign arbitral awards are clearly not so privileged in Malaysia as was previously thought.  Nevertheless, they are not utterly deprived of remedies. It remains possible to register the award as a judgement in the courts of the country where the award was made (in this case being Singapore) and then to seek to register and enforce that judgement under the Reciprocal Enforcement of Judgement Act 1958 (“REJA”) (provided that the country where the award was made is mentioned in the Schedule to REJA), or to use the award to found an action at common law in the Malaysian Courts.


 

The effect of the decision is further limited, as the Act has been repealed by sec. 51(1) of the Arbitration Act 2005 (Act 646) which came into force on 15.3.2006, and it appears likely that the Act is not intended to apply to foreign arbitral awards in respect of which applications to register are made after that date.


 

Nevertheless, the CA’s decision represents a possible inconvenience to holders of foreign arbitral awards registered under the Act, and to those whose applications to register awards are presently pending disposal. As such, the recent decision of the Federal Court to allow WSN leave to appeal against the decision of the CA, and to allow the Government of Malaysia to appear as amicus curiae keeps open the possibility that this inconvenience will be temporary.


 

AZRINA MOHD ISA ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 
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