12 October 2023

Our Partner, Susan Tan Shu Shuen and Associates, Koh Shien Lin and Noor Sumaeya Sofea Shamsudin from Zul Rafique & Partners’ Construction Dispute Resolution Practice Group succeeded in resisting the Employer’s (Plaintiff) application to set aside the Arbitral Award dated 7.4.2023 (“Final Award”) made in favour of the Contractor (Defendant) in the sum of approximately RM10 million (“Award Sum”), and obtained an order to enforce the Final Award. 

The Plaintiff’s application to set aside the Final Award is based on the allegation of violation of public policy and breach of natural justice under section 37(1)(b)(ii) and/or 37(2)(b) of the Arbitration Act 2005 (“AA 2005”). 2 main interesting points emerged from the Plaintiff’s setting aside application:-

1) The main thrust of the Plaintiff’s argument is that the Arbitrator purportedly failed to consider an admission made by the Defendant’s witness during the arbitral hearing as there is no specific reference to the admission in the Final Award at all apart from the general statement that the Arbitrator has considered all submissions and evidence of the parties. The Plaintiff further submitted that an admission made by witness on oath is the strongest evidence possible and thus, any informed member of the public would expect the decision or award to favour the Plaintiff; and  

The Plaintiff further urged the Court to invoke its inherent jurisdiction to replace and/or vary the terms of the Final Award by allowing its counterclaim for the backcharges on defects and/or outstanding works.

In response to these 2 points, Zul Rafique & Partners (“ZRp”) submitted the following:
1) Natural justice does not necessitate comprehensive responses to each and every argument presented by the Plaintiff. In any event, it is clear from the Final Award that the Arbitrator had considered all evidence and submissions produced by parties including the admission raised by the Plaintiff. The Arbitrator’s preference for the Defendant's evidence and submissions does not constitute a breach of natural justice, let alone violation of public policy;

Under section 37 of the AA 2005, the Court does not have jurisdiction to order the replacement and/or variation of the Final Award as there is no such remedy available thereunder.

Persuaded by ZRp’s arguments, the High Court dismissed the Plaintiff’s application to set aside the Final Award, and allowed the Defendant’s application to enforce the same. Following ZRp's prior success in assisting the Defendant to secure the Award Sum in a stakeholder account through the security of payment application under section 37(7) of the AA 2005, the High Court ordered for the release of the Award Sum held in the stakeholder account to the Defendant (see: Article on A Notable Victory of Obtaining RM10 Million Security in one of the First Security for Payment Applications pursuant to Section 37(7) of the Arbitration Act 2005).

For more insight into this area of law, please contact our Partners in the Construction Dispute Resolution Practice Group:
Kuhendran Thanapalasingam
Susan Tan Shu Shuen

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