Challenging and Enforcing Arbitration Awards in Malaysia

This article was first published on Global Arbitration Review in May 2024; for further in-depth analysis, please visit the GAR Know-how “Challenging and Enforcing Arbitration Awards”.

Authors: Tan Sri Dato’ Cecil Abraham, Aniz Ahmad Amirudin, and Shabana Farhaana Amirudin

Form of awards

1. Must an award take any particular form?

For an award to be enforceable, it must comply with the provisions of section 33 of the Arbitration Act 2005 (the 2005 Act). Pursuant to section 33 of the 2005 Act, an award must be in written form and signed by the arbitrator.

In respect of an award by a larger tribunal, the award need only be signed by the majority, although for clarity and prudence, all members are advised to sign the award. If they do not, reasons must be provided for any absent signatures.

An award must also furnish the reasons on which it is based. Exceptions lie where there is an agreement to the contrary between the parties or the award is a consent award.

The award must be dated and the seat of arbitration stated.

Procedural law for recourse against an award (other than applications for setting aside)

2. Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)? What are the time limits?

On receipt of an award, parties to arbitration proceedings will be afforded a 30-day window to present any requests for correction, interpretation or for additional awards to be made, as may be required. The relevant provisions are contained in section 35 of the 2005 Act.

If the arbitral tribunal considers the request to be justified, the correction or interpretation shall thereafter form part of the award. A party may request that the arbitral tribunal correct any computation, clerical or typographical errors or request that the tribunal give an interpretation of a specific point or part of the award.

Correction

A party may bring to the arbitral tribunal’s attention any accidental errors in the award (computation, clerical or typographical) and request that the tribunal rectify those errors. In appropriate cases, the arbitral tribunal will grant a corrective award to effect the necessary changes.

Interpretation

A party may request the arbitral tribunal to give an interpretation of a specific point or part of an award to resolve any areas of ambiguity. As a prerequisite, the other party must agree to the same. The arbitral tribunal will then make an interpretative award to address and resolve the ambiguity.

Additional awards

A party may request the arbitral tribunal to make an additional award for claims omitted from the award. If the arbitral tribunal considers the request to be justified, it will make the additional award within 60 days of receipt of the request.

3. May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

The Malaysian courts have consistently demonstrated judicial adherence to the non-interventionist approach with respect to arbitral awards. This is to promote the finality of awards in accordance with legislative intent. Parties who have elected to resolve their disputes via arbitration are prohibited from resiling from their undertaking and seeking alternative remedies in a court of law. As such, stringent standards have been set up in the face of any applications concerning the setting aside of an arbitral award.

In the past, parties could apply to either set aside an arbitral award pursuant to section 37 of the 2005 Act or refer to the high court any question of law arising out of an award pursuant to section 42 of the 2005 Act. The latter, dubbed ‘an appeal in all but name’, gave rise to considerable difficulties in the administration of justice where the distinction between questions of law and fact became muddied.

The provision under section 42 of the 2005 Act was eventually repealed by the Arbitration (Amendment) (No. 2) Act 2018 (which came into force on 8 May 2018) in an attempt to counter the Federal Court’s wide-ranging interpretation in Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Resam Melayu Pahang and other appeals [2018] 1 MLJ 1. The decision expanded the scope of judicial challenges against arbitral awards on questions of law to include those that had previously been referred to an arbitrator. This area was previously non-challengeable.

The repeal of section 42 of the 2005 Act leaves the provision under section 37 as the only available provision for an aggrieved party to mount a challenge on arbitral awards. Eight grounds are available under section 37(1), paragraphs (a) and (b) that warrant the setting aside of an arbitral award. The party making the application to set aside an arbitration award must provide proof that:

a party to the arbitration agreement was under some form of incapacity;
the arbitration agreement is invalid under the law to which the parties have subjected it;
the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings;
the arbitration award is not linked to the terms of arbitration;
the arbitration award is beyond the scope of the submission to arbitration;
the composition of the arbitral tribunal or the procedure was not in accordance with the parties’ agreement;
the dispute cannot be settled by arbitration; or
the award is in conflict with the public policy of Malaysia.

These provisions mirror article 34 of the UNCITRAL Model Law on International Commercial Arbitration (the UNCITRAL Model Law).

Setting aside of arbitral awards

4. Is there a time limit for applying for the setting-aside of an arbitral award?

Section 37(4) of the 2005 Act stipulates that an application to set aside an arbitral award may not be made after the expiry of 90 days from the date on which the party making the application received the award.

In BM City Realty & Construction Sdn Bhd v Merger Insight (M) Sdn Bhd [2023] CLJU 2393, the High Court dismissed an application to set aside an arbitral award as the affidavit in support of the same was only filed and served 107 days after the arbitral award was received by the parties. As there were no reasons given by the plaintiff to explain the delay and nor was an application made for an abridgment or extension of time, the plaintiff was found to be in breach of the mandatory requirement set under section 37(4) of the 2005 Act. The application was thus dismissed on the ground of procedural delay alone.

5. What kind of arbitral decision can be set aside in your jurisdiction? What are the criteria to distinguish between arbitral awards and procedural orders in your jurisdiction? Can courts set aside partial or interim awards?

The courts may set aside both partial and interim awards in Malaysia. Section 2 of the 2005 Act defines an award as ‘a decision of the arbitral tribunal on the substance of the dispute and includes any final, interim or partial award and any award on costs or interest but does not include interlocutory orders’. As such, procedural orders, being interlocutory and mainly procedural in nature, do not qualify as awards under the 2005 Act.

6. Which court has jurisdiction over an application for the setting aside of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

The High Court of Malaya or the High Court of Sabah and Sarawak, as the case may require.

Insofar as domestic arbitration is concerned, the Federal Court confirmed in Masenang Sdn Bhd v Sabanilam Enterprise Sdn Bhd [2021] 9 CLJ 1 that it is the court at the seat of arbitration that is vested with exclusive jurisdiction to regulate or supervise the arbitral proceedings and the award. It was further clarified that the court where the cause of action arose cannot oust the jurisdiction afforded and vested in the seat court.

7. What documentation is required when applying for the setting aside of an arbitral award?

The procedural requirement for setting aside an arbitral award is governed by Order 69, Rule 5 of the Rules of Court 2012 (the ROC 2012), which stipulates that an application must be made by way of an originating summons and an affidavit in support. The affidavit in support should include a copy of the arbitration agreement and the award.

8. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

If the award or the agreement is in a language other than the national language (ie, Malay) or English, the applicant must provide a duly certified translation of the full award in English.

9. What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

The setting aside of awards falls within the jurisdictional ambit of the commercial division of the high court. Pursuant to section 37(4) of the 2005 Act, an application to set aside an award may not be made after the expiry of 90 days from the date on which the party making the application received the award.

If a challenge is made against the award that is sought to be enforced, the time frame for resolution can vary from three to nine months. An appeal arising therefrom to the Court of Appeal may take between six and 12 months to be determined. Thereafter, any application for leave to appeal to the Federal Court may take a further three to six months to be determined. If leave to appeal to the Federal Court is granted, that appeal may take a further six to nine months to be determined.

The parties are free to agree on the language to be used in the arbitral proceedings pursuant to section 24 of the 2005 Act. The arbitrator shall determine the language if the parties failed to agree on the language to be used. There is no provision in the 2005 Act governing the length of submissions or of the documentation filed by the parties.

10. What are the different steps of the proceedings?

The process is adversarial and is based on affidavit evidence. Following the exhaustion of affidavits, parties will be required to address the court by way of written submissions, which are submitted ahead of the hearing, followed by oral submissions at the hearing.

11. May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction? Do setting-aside proceedings have suspensive effect?
Malaysia

Applications to set aside an arbitration award are governed by section 37 of the 2005 Act, read together with Order 69, Rule 5 of the ROC 2012. Case law authorities provide that if there is an application to set aside the award in one court and an application in the same court or another court to enforce the award, the application for enforcement should be stayed pending the outcome of the application to set aside the award. An application to set aside is made to the high court.

The prospects of setting aside the arbitral award must be genuine. Furthermore, the decision in Malaysian Bio-Xcell Sdn Bhd v Lebas Technologies Sdn Bhd & Another Appeal [2020] 3 MLJ 723 serves to illustrate that an adjournment of the enforcement proceedings may be justified by an order for security.

12. What are the grounds on which an arbitral award may be set aside?

Eight grounds are available under section 37(1), paragraphs (a) and (b) of the 2005 Act that warrant the setting aside of an arbitral award. The party making the application to set aside an arbitration award must provide proof that:

a party to the arbitration agreement was under some form of incapacity;
the arbitration agreement is invalid under the law to which the parties have subjected it;
the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings;
the arbitration award is not linked to the terms of arbitration;
the arbitration award is beyond the scope of the submission to arbitration;
the composition of the arbitral tribunal or the procedure was not in accordance with the parties’ agreement;
the dispute cannot be settled by arbitration; or
the award is in conflict with the public policy of Malaysia.

These provisions mirror article 34 of the UNCITRAL Model Law.

13. When assessing the grounds for setting aside, may the judge conduct a full review and reconsider factual or legal findings from the arbitral tribunal in the award? Is the judge bound by the tribunal’s findings? If not, what degree of deference will the judge give to the tribunal’s findings?

In Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 9 CLJ 213, the Federal Court held that section 37(1) of the 2005 Act ‘clearly provides that the High Court retains a residual discretion not to set aside an award even though a ground for setting aside may be made out’. It was further clarified that the exercise of residual discretion is grounded on breach of the rules of natural justice regarding which rule of natural justice was breached, the materiality of the same and the possible effect on the outcome.

Regarding findings of fact, the courts have consistently held that the arbitrator is the sole judge of the same and drawing wrong inferences of facts from evidence is itself not sufficient as a ground to warrant the setting aside of an award. A court should not rehear the matter and has no jurisdiction to subsequently substitute its own interpretation of the law and facts however erroneous the reasons in the arbitral award may be; therefore, the mere fact that a decision is wrong does not justify its setting aside under section 37 of the 2005 Act.

The court does not review the merits of the arbitral tribunal’s decision.

14. Is it possible for an applicant in setting-aside proceedings to be considered to have waived its right to invoke a particular ground for setting aside? Under what conditions?

Section 7 of the 2005 Act provides that a party who knows of any provision of the Act from which the parties may derogate or any non-compliance with the arbitration agreement, and yet proceeds with the arbitration without raising any objection to such non-compliance without undue delay or within the time limit provided, shall be deemed to have waived its rights to object thereafter.

For instance, any failure to raise an objection before the arbitrator pertaining to the arbitrator’s appointment and his or her jurisdiction pursuant to section 18(1) of the 2005 Act constitutes a waiver of one’s rights to object to the jurisdiction of the arbitrator in an application to set aside the arbitral award.

However, in paragraph 143 of Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd & Anor Appeal [2021] 2 CLJ 173, the Court of Appeal held that:

whilst generally there can be a waiver of the matters or content of what is deliberated or what transpires in the arbitration proceedings, there can be no waiver on the part of the parties to the arbitration with respect to the cessation of the arbitrator’s mandate and jurisdiction in relation to the obligation to deliver the award on time or within an extended period.

As such, a party’s silence or inaction prior to the handing down of an arbitral award is irrelevant.

15. What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges or appeals are available?

Should the high court allow the setting-aside application, the arbitral award would be set aside. The aggrieved party may appeal against the decision of the high court to the Court of Appeal.

16. Will courts take into consideration decisions rendered in relation to the same arbitral award in other jurisdictions or give effect to them?

Decisions in other jurisdictions may have persuasive value, especially where the relevant statutory framework in other jurisdictions is similar; however, ultimately, the courts will be guided by the provisions of the 2005 Act.

Procedural law for recognition and enforcement of arbitral awards

17. What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction?

Arbitration proceedings in Malaysia are governed by the Arbitration Act 1952 (the 1952 Act) and the 2005 Act. The 1952 Act applies to arbitrations commenced prior to 15 March 2006, and the 2005 Act applies to arbitrations commenced after 15 March 2006.

The applicable procedural law for recognition and enforcement of an arbitral award in Malaysia can be found under section 38 of the 2005 Act, while section 39 of the 2005 Act deals with grounds on which recognition and enforcement of an award may be refused.

In respect of international conventions, Malaysia is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the Convention on the Settlement of Investment Disputes between States and the Nationals of Other States (the ICSID Convention), the latter of which was enacted in 1966. Malaysia is also a signatory to the Comprehensive Investment Agreement between members of the Association of Southeast Asian Nations.

18. Is your jurisdiction a party to treaties facilitating recognition and enforcement of arbitral awards (eg, the ICSID Convention or bilateral treaties)? (In particular, is your state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under article I(3) of the Convention?

Yes, subject to the reciprocity reservation (ie, it will only enforce arbitration awards of other signatory states). The Convention came into force in Malaysia on 3 February 1986.

Recognition proceedings

19. Is there a time limit for applying for the recognition and enforcement of an arbitral award?

There is no prescribed time limit under the 2005 Act; however, parties should be mindful of the fact that section 6(1)(a) of the Limitation Act 1953 provides that any action must be brought within six years of a cause of action arising.

20. Which court has jurisdiction over an application for recognition and enforcement of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

Pursuant to sections 38 and 39 of the 2005 Act, an application for recognition and enforcement is made to the high court. Pursuant to section 2 of the 2005 Act, the term ‘high court’ refers to the High Court of Malaya or the High Court of Sabah and Sarawak, as the case may require.

21. What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible?

Section 38 of the 2005 Act provides a summary procedure for recognition and enforcement of awards that is applicable to both domestic and foreign awards. As for domestic awards, it is the court at the seat of the arbitration that is vested with exclusive jurisdiction to regulate or supervise the arbitral proceedings and the award.

On written application to the high court, an award made in respect of an arbitration where the seat of arbitration is in Malaysia or an award from a foreign state shall, subject to sections 38 and 39, be recognised as binding and be enforced by entry as a judgment in terms of the award or by action (section 38, paragraphs (1) and (2)). A ‘foreign state’ in this context means a state that is a party to the New York Convention (section 38(4)).

The mandatory nature of section 38 of the 2005 Act serves to limit the court’s discretion in refusing to recognise and enforce an award when the formal requirements of the 2005 Act have been satisfied.

Section 39 of the 2005 Act lists the exhaustive grounds on which recognition or enforcement may be refused.

There is no express requirement in the 2005 Act for an applicant to identify the assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings.

22. Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?

Applications for recognition in Malaysia can be made ex parte but can be directed to be heard on an inter partes basis, which would make the process adversarial; however, generally, applications for recognition of awards are determined on an ex parte basis.

23. What documentation is required to obtain recognition?

Pursuant to section 38 of the 2005 Act, a party seeking to recognise an arbitral award will need to make an application to the high court by way of an originating summons. The application must be accompanied by the duly authenticated original copy of the award or a duly certified copy of the same, and the original arbitration agreement or a duly certified copy of the same.

24. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

If the award or the agreement is in a language other than the national language (ie, Malay) or English, the applicant must provide a duly certified translation of the full award in English.

25. What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

The enforcement of awards falls within the jurisdictional ambit of the commercial division of the high court. Proceedings must be completed within nine months of the date on which the application to enforce the award is filed. If a challenge is made against the award that is sought to be enforced, the time frame for resolution can vary from three to nine months. An appeal arising therefrom to the Court of Appeal may take between six and 12 months to be determined. Thereafter, any application for leave to appeal to the Federal Court may take a further three to six months to be determined. If leave to appeal to the Federal Court is granted, that appeal may take a further six to nine months to be determined.

The parties are free to agree on the language to be used in the arbitral proceedings pursuant to section 24 of the 2005 Act. The arbitrator shall determine the language if the parties failed to agree on which language is to be used. There is no provision in the 2005 Act governing the length of submissions or of the documentation filed by the parties.

26. Do courts recognise and enforce partial or interim awards?

Yes, the courts recognise and enforce both partial and interim awards in Malaysia. Section 2 of the 2005 Act defines an award as ‘any final, interim or partial award and any award on costs or interest’ but excludes interlocutory orders.

27. What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from the ones provided under article V of the New York Convention?

The grounds for refusing recognition of an award under section 39 of the 2005 Act are identical to the grounds for setting aside an award under section 37 thereof. The grounds applied by the courts under section 39 of the 2005 Act are similar to the grounds provided under article V of the New York Convention.

In addition, an award may be refused recognition when it has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made (2005 Act, section 39(1)(a)(vii)).

28. When assessing the grounds for refusing recognition, may the recognition judge conduct a full review and reconsider factual or legal findings from the arbitral tribunal in the award? Is the judge bound by the tribunal’s findings? If not, what degree of deference will the judge give to the tribunal’s findings?

Insofar as findings of fact are concerned, the courts have consistently held that an arbitrator remains the ‘master of facts’ and that a court should not rehear the matter as it has no jurisdiction to subsequently substitute its own interpretation of the law and facts, however erroneous the reasons in the arbitral award may be; therefore, the mere fact that a decision is wrong does not justify its use as a ground for refusing recognition.

The Malaysian courts have always accorded foremost consideration in protecting successful claimants who have submitted themselves to the arbitral regime. As such, the threshold to oppose any enforcement application remains rather high.

29. Is it possible for a party to be considered to have waived its right to invoke a particular ground for refusing recognition of an arbitral award?

Section 7 of the 2005 Act provides that a party who knows of any provision of the Act from which the parties may derogate or any non-compliance with the arbitration agreement, and yet proceeds with the arbitration without raising any objection to the non-compliance without undue delay or within the time limit provided, shall be deemed to have waived its rights to object thereafter.

However, in paragraph 143 of Ken Grouting Sdn Bhd v RKT Nusantara Sdn Bhd & Anor Appeal [2021] 2 CLJ 173, the Court of Appeal held that there can be no waiver on the part of the parties to the arbitration with respect to the cessation of the arbitrator’s mandate and jurisdiction in relation to the obligation to deliver the award on time or within an extended period.

30. What is the effect of a decision recognising an arbitral award in your jurisdiction?

Section 38(1) of the 2005 Act states that on application to the high court, an award shall be recognised as binding and be enforced by entry of judgment in terms of the award or by action. The award then becomes immediately enforceable.

31. What challenges are available against a decision refusing recognition in your jurisdiction?

Section 39 of the 2005 Act deals with grounds for refusing recognition or enforcement, which corresponds to article 36 of the UNCITRAL Model Law. The listed grounds for refusal of recognition are exhaustive; therefore, if no ground is present, the award must be recognised. This position has been affirmed by the apex court of Malaysia in CTI Group Inc v International Bulk Carriers SPA [2017] 5 MLJ 314.

32. What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

One of the grounds for refusing recognition or enforcement under section 39(1)(a)(vii) of the 2005 Act is if the award has not yet become binding on the parties, or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made. In this respect, courts have the discretion to order a stay or suspension of the recognition or enforcement of arbitration decisions, which may be justified with an order for security.

In matters relating to arbitration, Malaysian courts, like their foreign counterparts, have always accorded foremost consideration to the achievement of the objects of the arbitral regime: finality and resolution. This is to give effect to legislative intent and to protect successful claimants who have submitted themselves to arbitration from having their rights rendered illusory.

33. If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

The high court can order a party to provide appropriate security pending enforcement of an award under section 39(2) of the 2005 Act, which deals with parallel proceedings.

The discretion granted to the high court under section 39(2) may be exercised only to protect the party seeking enforcement during the period of an adjournment; therefore, this is the fundamental consideration against the grant of security. Other relevant factors may include a lack of enthusiasm on behalf of the party applying to set aside or suspend the award or to prosecute that award, the validity of the award or the difficulty threshold for enforcement of the award because of the delay.

In determining whether to grant security, the high court is also likely to take into consideration the financial situation of the respondent and whether the respondent has any assets within the jurisdiction.

The high court may direct that a conditional stay be granted subject to a bank guarantee being provided or a sum of money being paid into a joint account between the parties or their respective solicitors.

The forms of security over assets generally include financial instruments, real estate, movable property, cash deposits, and claims and receivables.

34. Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

One of the grounds for refusing recognition or enforcement under section 39(1)(a)(vii) of the 2005 Act is where the award has been set aside or suspended by a court of the country in which, or under the law of which, the award was made. The court retains discretion to enforce the award; however, that jurisdiction will be exercised sparingly if the award has been set aside at the seat.

If the arbitral award is set aside by a court order, the aggrieved party may appeal against the court order to the Court of Appeal.

Service

35. What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction?

Order 62 of the ROC 2012 governs the service of judicial documents to a defendant in Malaysia. Personal service of a document is required only where specifically provided for in the ROC 2012 or by order of the high court.

Order 92, Rule 1 of the ROC 2012 governs the language of judicial documents, which must be in the national language (ie, Malay) and may be accompanied by a translation in English.

Personal service of a document is effected by leaving a copy of the document with the person to be served (ROC 2012, Order 62, Rule 3) and not his or her agent, except when authorised under Order 10, Rule 2(1) of the ROC 2012. Under Order 62, Rule 4 of the ROC 2012, service on a corporate office is effected by:

leaving a copy of the document at the registered office of the corporation;
sending a copy of the document by registered post addressed to the corporation at its principal office;
handing a copy of the document to the secretary or any director of the corporation; or
in the case of a foreign company registered in Malaysia, handing a copy of the document or sending it by registered post to a person authorised to accept service of process on behalf of the foreign company.

The court may make an order for substituted service if personal service is required.

Ordinary service is effected by leaving the document at the proper address of the person to be served, by prepaid registered post, by facsimile through a party’s solicitor, in such other manner as may be agreed between the party serving and the party to be served or in such other manner as the court may direct. The proper address for service of any person is the address for service of that person.

Under Order 62, Rule 6 of the ROC 2012, if, at that time, the person does not have a proper address for service, service may be effected:

at the business address of his or her solicitor;
in the case of an individual, at his or her last known address;
in the case of individuals who are suing or being sued in the name of a firm, at the principal or last known place of business of the firm; or
in the case of a body corporate, at the registered or principal office of the body.

Service on a minister in proceedings that are not by or against the government is governed by the Government Proceedings Act 1956 (ROC 2012, Order 62, Rule 7). Section 26 of the Government Proceedings Act provides that all documents required to be served on the government for the purpose of, or in connection with, any civil proceedings by or against the government may be served, in the case of proceedings by or against the federal government, on the attorney general, and in the case of proceedings by or against the state government, on the state secretary.

Notices sent from any court may be sent by post or electronically (ROC 2012, Order 62, Rule 11).

If no appearance has been entered or if the address for service is non-existent, all relevant documents that need to be served may be served by filing them with the proper officer of the court (ROC 2012, Order 62, Rule 12).

36. What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents together with a translation in the language of this jurisdiction? Is your jurisdiction a party to the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention)? Is your jurisdiction a party to other treaties on the same subject matter? When is a document considered to be served to the opposite party?

Insofar as service of process out of jurisdiction is concerned, leave is to be first obtained from the high court pursuant to Order 11, Rules 3 and 4 of the ROC 2012.

Malaysia is not a party to the Hague Convention; therefore, any service to a defendant outside Malaysia may be accomplished through a law firm within the particular foreign jurisdiction.

Malaysia is a party to a number of bilateral investment treaties and is therefore afforded a method for the service of documents outside diplomatic channels or for private process servers. In general, these communications are sent and received by the Ministry of Foreign Affairs unless the relevant treaty specifies an alternative designated authority, be it the Ministry of International Trade and Industry or the attorney general.
Order 92, Rule 1 of the ROC 2012 governs the language of judicial documents, which must be in the national language (ie, Malay) and may be accompanied by a translation in English.

Identification of assets

37. Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction? Are there any databases or publicly available registers providing information on award debtors’ interests in other companies?

No.

38. Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

Yes, for example, attachment proceedings.

Enforcement proceedings

39. What kinds of assets can be attached within your jurisdiction?

Attachment proceedings may be taken out against both movable and immovable property.

40. Are interim measures against assets available in your jurisdiction? Is it possible to apply for interim measures under an arbitral award before requesting recognition? Under what conditions?

Yes. An application can be filed pursuant to sections 11 or 19J of the 2005 Act seeking for interim measures as long as it can be demonstrated that the interim relief will aid, support or facilitate the arbitral proceedings (ie, the relief is necessary to maintain the status quo or to preserve the subject matter, it does not impede the arbitral proceedings, and it protects the effectiveness of its final awards).

The High Court of Kuala Lumpur clarified in Danieli & C Officine Mecchaniche SpA v Southern HRC Sdn Bhd [2021] 5 CLJ 71 that the powers of the Malaysian courts in respect of arbitral awards are limited to their recognition and enforcement under section 38 of the 2005 Act and that relief or orders cannot be granted in respect of an award unless recognised in Malaysia.

Notwithstanding the above, it remains unclear whether the same principles would apply to a request made for interim measures pursuant to section 19J of 2005 Act. In any event, the decision in Padda Gurtaj Singh & Ors v Axiata Group Berhad & Ors [2022] 1 LNS 623 is illustrative in that:

As long as the Court is of the view that there is urgency and the interim measure will aid, support or facilitate the arbitral proceedings i.e. necessary to maintain status quo or for preservation of the subject matter and does not impede the arbitral proceedings and protect the effectiveness of its final awards, this should suffice for the Court to issue the interim measure in the form of an injunctive order.

41. What is the procedure for obtaining interim measures against assets in your jurisdiction?

Court authorisation is required, and the application is made to the high court by way of a notice of application supported by an affidavit. The notice of application can be heard ex parte in certain situations, such as if the situation is urgent or when there is a real risk that the assets might be dissipated.

42. What is the procedure for implementing interim measures against assets in your jurisdiction?

A party will generally rely on section 11 or section 19 (including section 19(A) to (J)) of the 2005 Act, or both, to secure interim relief. If the party seeks the court’s assistance in securing interim measures, section 11 read with the ROC 2012 yields the relevant provisions.

If the party places sole reliance on the tribunal to order interim measures, the relevant provision is section 19 of the 2005 Act, which corresponds to Article 17 of the UNCITRAL Model Law. If the party were to apply for court authorisation for the interim measures, it must make an application to the high court by way of a notice of application supported by an affidavit.

The main difference between section 11 and section 19 of the 2005 Act is that the power of the high court under section 11 can be invoked at any time after the arbitration agreement comes into existence and commencement of the arbitral process until the time of the making of the award and its enforcement. In contrast, section 19 of the 2005 Act can be invoked only after the constitution of the arbitral tribunal but before the termination of the arbitration proceedings.

43. What is the procedure for requesting attachment against assets in your jurisdiction? Who are the stakeholders in the process?

Court authorisation must be obtained to attach assets in Malaysia. These proceedings are made on an ex parte basis.

Order 45, Rules 1 and 1A of the ROC 2012 provide that a judgment or order for the payment of money may be enforced by one or more of, among other things, the following means: writ of seizure and sale; garnishee proceedings; a charging order; or appointment of a receiver.

Regarding garnishee proceedings, Order 49 of the ROC 2012 prescribes a two-stage process.

If the garnishee is within the jurisdiction (ROC 2012, Order 49, Rule 1(1)), an applicant may commence proceedings by obtaining an order for the garnishee to show cause regarding why he or she should not pay the judgment creditor (ROC 2012, Order 49, Rule 1(2)). The order to show cause in Form 97, specifying the time and place for further consideration of the matter, will attach the debt to answer the judgment and the costs of the garnishee proceedings (ROC 2012, Order 49, Rule 1(2)).

The ex parte application for the show cause order must be supported by a Form 98 affidavit stating (i) the judgment or order and the unpaid sum for enforcement, (ii) that the garnishee is believed to be within the jurisdiction and the judgment debtor is indebted by the garnishee, and (iii) the sources of the aforementioned information and belief (ROC 2012, Order 49, Rule 2).

Service must be made, personally, at least seven days before the time appointed for further consideration to the garnishee and the judgment debtor, unless the court orders otherwise (ROC 2012, Order 49, Rule 3(1)). The order will bind the garnishee from the time of service of any debt specified in the order (ROC 2012, Order 49, Rule 3(2)).

If a garnishee does not attend or dispute the debt owed, an order absolute (Form 99) shall be made (ROC 2012, Order 49, Rule 4(1)).

A judgment creditor may apply to court for a charging order to impose a charge on securities, such as shares, bonds and dividends, owned by the judgment debtor. The process consists of two stages and is akin to garnishee proceedings.

44. What is the procedure for implementing attachment orders against assets in your jurisdiction?

If the property is to be seized, a seizure shall be made by order of court prohibiting the transfer, charge, lien or lease of title for immovable property (ROC 2012, Order 47, Rule 6).

A seizure shall be made by way of a prohibitory order by the court. An application for a prohibitory order can be made ex parte by way of notice of application supported by an affidavit (ROC 2012, Order 47 Rules 6(b) and (c)). The judgment debtor must then be served with a copy of the prohibitory order issued to the judgment creditor for presentation to the Land Office Registrar (ROC 2012, Order 47, Rule 6(d)). The prohibitory order will then need to be registered to seize the property.

Alternatively, a party may seek injunctive relief pursuant to Order 29 of the ROC 2012, read with section 11 of the 2005 Act, in the form of a prohibitory order, or a Mareva injunction, to prevent a party from dealing with the immovable property. This is generally applied for when seeking interim relief as opposed to post-award final relief.

45. Are there specific rules applicable to the attachments against sums in bank accounts or other assets deposited with banks?

Order 49 of the ROC 2012 governs garnishee proceedings. If the garnishee is within the jurisdiction (ROC 2012, Order 49 Rule 1(1)), an applicant may commence proceedings by obtaining an order for the garnishee to show cause regarding why he or she should not pay the judgment creditor (ROC 2012, Order 49, Rule 1(2)).

An order to show cause in Form 97, specifying the time and place for further consideration of the matter, will attach the debt in response to the judgment and the costs of the garnishee proceedings (ROC 2012, Order 49, Rule 1(2)).

An ex parte application for a show cause order must be supported by a Form 98 affidavit stating (1) the judgment or order and the unpaid sum for enforcement, (2) that the garnishee is believed to be within the jurisdiction and the judgment debtor is indebted by the garnishee, and (3) the sources of the aforementioned information and belief (ROC 2012, Order 49, Rule 2).

Service must be made personally at least seven days before the time appointed for further consideration to the garnishee and the judgment debtor, unless the court orders otherwise (ROC 2012, Order 49, Rule 3(1)). The order will bind the garnishee from the time of service of any debt specified in the order (ROC 2012, Order 49, Rule 3(2)).

If a garnishee does not attend or dispute the debt owed, an order absolute (Form 99) shall be made (ROC 2012, Order 49, Rule 4(1)).

Although there is nothing to preclude the national courts from granting Mareva-type injunctions against defendants that extend to their assets outside the jurisdiction (although this is only allowed in exceptional circumstances) as a form of temporary relief, attachment proceedings appear to be only applicable to bank accounts opened in foreign or domestically owned banks within the jurisdiction.

46. May a creditor of an award rendered against a private debtor attach assets held by another person on the grounds of piercing the corporate veil or alter ego? What are the criteria, and how may a party demonstrate that they are met?

Most situations concerning the piercing of the corporate veil involve an attempt to pierce the corporate veil to seek relief against a parent company by establishing that there is wrongdoing of which the parent company is also a perpetrator. Essentially the creditor must demonstrate that the companies in question are a single economic unity and that the subsidiary has been used to evade the parent company’s legal obligations.

In the absence of fraud and a clear act of wrongdoing, objection cannot be made in respect of a company using a corporate structure to avoid a legal obligation from being incurred; the court’s power to lift the corporate veil does not exist for the purpose of reversing such avoidance to create legal obligations.

Based on the information available, it is necessary to establish abuse of the corporate structure, concealment of assets or evasion of liabilities through the use of another person or company by the private debtor to warrant the lifting or piercing of the corporate veil.

Recognition and enforcement against foreign states

47. Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?

Sections 38 and 39 of the 2005 Act deal with recognition and enforcement of both domestic and foreign arbitral awards and the grounds for refusal, respectively. The provisions apply to foreign states as well. Section 38(4) of the 2005 Act defines ‘foreign state’ as a state that is a party to New York Convention.

48. What is the procedure for service of extrajudicial and judicial documents to a foreign state?

Insofar as service of process out of jurisdiction is concerned, leave is to be first obtained from the high court pursuant to Order 11, Rules 3 and 4 of the ROC 2012.

Malaysia is not a party to the Hague Service Convention; therefore, any service to a defendant outside Malaysia may be accomplished through a law firm within the particular foreign jurisdiction.

Order 92, Rule 1 of the ROC 2012 governs the language of judicial documents, which must be in the national language (ie, Malay) and may be accompanied by a translation in English.

Service of the document may be effected once it has been left with the person or in accordance with the method prescribed by the court at the time of obtaining leave. The server must file a copy of the process and the details specifying the service in the form of an affidavit with the court to demonstrate that service has been effected or attempted.

49. May a foreign state invoke sovereign immunity (immunity from jurisdiction) to object to the recognition or enforcement of arbitral awards?

It has been established under international law that the sovereign state, being sovereign or equivalent, cannot be subject to the jurisdiction of another sovereign state or equivalent without its consent to jurisdiction; however, a state can waive its immunity from jurisdiction by signing an agreement or arbitration clause.

50. May award creditors apply interim measures against assets owned by a sovereign state?

There is no distinction between the availability of interim measures generally and the availability of interim measures against assets owned by a sovereign stated under the 2005 Act.

However, section 11 of the 2005 Act, read together with section 29(1) of the Government Proceedings Act 1956, provides that the courts do not have the power to grant an injunction against the government; instead, the courts may make a declaratory order stating the rights of parties.

51. Are assets belonging to a foreign state immune from enforcement in your jurisdiction?

Assets belonging to a foreign state are not immune from enforcement in Malaysia.

52. Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?

It is possible for a foreign state to waive immunity from enforcement in Malaysia, but there should be an agreement between the parties to waive immunity.

53. Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?

Case law in Malaysia is silent on this matter.

54. May property belonging to persons subject to national or international sanctions be attached? Under what conditions? Is there a specific procedure?

Malaysia does not recognise any unilateral sanctions on any country unless the resolution for the sanctions is adopted by the United Nations General Assembly. Domestic sanctions are usually regulated by the Strategic Trade Act 2010 and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

Properties belonging to persons subject to sanctions would be frozen, seized or forfeited by the relevant regulators. Regulation 3 of the Strategic Trade (United Nations Security Council Regulations) Regulations 2010 provides that all secured and unsecured rights and interests held by a person other than a designated person or his or her agent in the property are entitled to the same ranking as they would have been entitled to had the property not been frozen.

On the other hand, section 54 of the AMLA provides that as long as seizure of the property remains in force, no attachment process can be commenced, maintained or continued except at the instance of the federal government or a state government, at the instance of a local authority or statutory authority, or with the prior consent in writing of the public prosecutor.

Challenging and Enforcing Arbitration Awards in Malaysia

Form of awards

1. Must an award take any particular form?

Procedural law for recourse against an award (other than applications for setting aside)

2. Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)? What are the time limits?

Correction

Interpretation

Additional awards

3. May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

Setting aside of arbitral awards

4. Is there a time limit for applying for the setting-aside of an arbitral award?

5. What kind of arbitral decision can be set aside in your jurisdiction? What are the criteria to distinguish between arbitral awards and procedural orders in your jurisdiction? Can courts set aside partial or interim awards?

6. Which court has jurisdiction over an application for the setting aside of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

7. What documentation is required when applying for the setting aside of an arbitral award?

8. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

9. What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

10. What are the different steps of the proceedings?

11. May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction? Do setting-aside proceedings have suspensive effect? Malaysia

12. What are the grounds on which an arbitral award may be set aside?

13. When assessing the grounds for setting aside, may the judge conduct a full review and reconsider factual or legal findings from the arbitral tribunal in the award? Is the judge bound by the tribunal’s findings? If not, what degree of deference will the judge give to the tribunal’s findings?

14. Is it possible for an applicant in setting-aside proceedings to be considered to have waived its right to invoke a particular ground for setting aside? Under what conditions?

15. What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges or appeals are available?

16. Will courts take into consideration decisions rendered in relation to the same arbitral award in other jurisdictions or give effect to them?

Procedural law for recognition and enforcement of arbitral awards

17. What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction?

Recognition proceedings

19. Is there a time limit for applying for the recognition and enforcement of an arbitral award?

20. Which court has jurisdiction over an application for recognition and enforcement of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?

21. What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible?

22. Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?

23. What documentation is required to obtain recognition?

24. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

25. What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

26. Do courts recognise and enforce partial or interim awards?

27. What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from the ones provided under article V of the New York Convention?

29. Is it possible for a party to be considered to have waived its right to invoke a particular ground for refusing recognition of an arbitral award?

30. What is the effect of a decision recognising an arbitral award in your jurisdiction?

31. What challenges are available against a decision refusing recognition in your jurisdiction?

32. What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

33. If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

34. Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

Service

35. What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction?

Identification of assets

37. Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction? Are there any databases or publicly available registers providing information on award debtors’ interests in other companies?

38. Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

Enforcement proceedings

39. What kinds of assets can be attached within your jurisdiction?

40. Are interim measures against assets available in your jurisdiction? Is it possible to apply for interim measures under an arbitral award before requesting recognition? Under what conditions?

41. What is the procedure for obtaining interim measures against assets in your jurisdiction?

42. What is the procedure for implementing interim measures against assets in your jurisdiction?

43. What is the procedure for requesting attachment against assets in your jurisdiction? Who are the stakeholders in the process?

44. What is the procedure for implementing attachment orders against assets in your jurisdiction?

45. Are there specific rules applicable to the attachments against sums in bank accounts or other assets deposited with banks?

46. May a creditor of an award rendered against a private debtor attach assets held by another person on the grounds of piercing the corporate veil or alter ego? What are the criteria, and how may a party demonstrate that they are met?

Recognition and enforcement against foreign states

47. Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?

48. What is the procedure for service of extrajudicial and judicial documents to a foreign state?

49. May a foreign state invoke sovereign immunity (immunity from jurisdiction) to object to the recognition or enforcement of arbitral awards?

50. May award creditors apply interim measures against assets owned by a sovereign state?

51. Are assets belonging to a foreign state immune from enforcement in your jurisdiction?

52. Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?

53. Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?

54. May property belonging to persons subject to national or international sanctions be attached? Under what conditions? Is there a specific procedure?

11. May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction? Do setting-aside proceedings have suspensive effect?
Malaysia