Newsflash – The new Malaysian Arbitration Act

The new Act will supersede the Arbitration Act 1952 (“the old Act”) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985. The aim of the new Act is to bring Malaysia in line with modern international practice, in keeping with the prevalence of arbitration as the preferred method of resolving international disputes.

 

To that end, the new Act is based on the United Nations Commission on International Trade Law Arbitration (UNCITRAL) Model Law but is not identical thereto.

 

Malaysia has lagged behind the region in arbitral reform. It has been recognised for many years that the old Act is outmoded and unsuitable for the effective resolution of modern commercial disputes. The Malaysian arbitral fraternity has been actively pushing for reform for more than a decade now. The new Act is a welcome sign that Malaysian law is striving to keep pace with global developments.

 

Changes made to the arbitral regime include sec. 18 of the new Act which sets out expressly paramount arbitral principles, namely the right of parties to be treated with equality and for each party to have a fair and reasonable opportunity to present its case. Others include the waiver of the right to object to any non-compliance in the event such objections are not made within the prescribed time frames, the competence of the arbitral tribunal to rule upon its own jurisdiction and the power of the arbitral tribunal to award security for costs. The new Act codifies many aspects of arbitral law which were previously governed by common law principles e.g. the point of commencement of an arbitration.

 

Some matters that do not appear to have been addressed by the new Act include provisions for interim measures of protection in aid of foreign proceedings as well as enforcement of international awards issued in Malaysia. Further, it is a cause of concern that sec. 42 of the new Act appears to allow the raising of any question of law ‘arising out of an award’ without any guidelines to filter frivolous applications designed merely to delay proceedings and enforcement.

 

The old Act will continue to apply to arbitrations commenced before the coming into force of the new Act. Given the pace of some arbitrations, and the resultant court actions, the old Act will continue to be referred to for at least a decade. Any detailed assessment of the merits of the new Act will have to await the outcome of cases which have yet to arise.

 

The course the Malaysian legislature has taken in implementing arbitral reform has been driven by the desire to keep Malaysia in tune with the international community. The Model Law has been the basis for reform in many countries in the world including all countries in the Asia – Pacific region that have undertaken reform. The new Act will hopefully demonstrate the national commitment to arbitration as an effective mode of dispute resolution and may well be the catalyst to promote Malaysia as the preferred venue in the region for international commercial arbitrations.

 

 

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

 
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