26 January 2024

In ushering in the new year and building on our previous success in resisting a setting aside application and in enforcing an arbitral award
[1], our Partner, Susan Tan Shu Shuen and Associates,  Koh Shien Lin and Noor Sumaeya Sofea binti Shamsudin from Zul Rafique & Partners’ Construction Dispute Resolution practice group had on 18th January 2024, succeeded in resisting the Sub-Contractor’s (“Plaintiff”) application to set aside the Arbitral Award dated 12.6.2023 (“Final Award”) that was made in favour of the Main Contractor (“Defendant”) and obtained an order to enforce the Final Award and for the arbitration costs be taxed. For further insights into the case background, refer to Victory in Arbitration: Main Contractor’s Claim of RM1.9 Million Allowed.

The Plaintiff's application to set aside the Final Award was based on the allegations of breach of natural justice and that the arbitral procedure adopted was not in accordance with the parties’ agreement pursuant to sections 37(1)(a)(vi),  37(1)(b)(ii), 37(2)(b)(i), and 37(2)(b)(ii) of the Arbitration Act 2005. The thrust of the Plaintiff’s complaints is that the arbitrator had purportedly failed to fulfill his mandate to consider the Plaintiff’s arguments and evidence on 8 instances and failed to apply the balance of probabilities standard of proof.

On the other hand, the Defendant filed an application for both the enforcement of the Final Award and taxation of arbitration costs under sections 38 and 44(1)(b) of the Arbitration Act 2005. In resisting the Defendant’s said application, the Plaintiff contended the enforcement application ought to be dismissed as the Final Award should be set aside; and the Defendant’s application for taxation of cost is allegedly procedurally wrong as it should be filed under a separate application and the costs claimed by the Defendant are unreasonable and on a wrongful basis.

Representing the Defendant in both applications, Zul Rafique & Partners submitted that all the complaints raised by the Plaintiff in its attempt to set aside the Final Award are essentially complaints on the substantive merits of the arbitrator’s findings, which could not be passed off as a denial of natural justice and do not constitute permissible grounds to set aside the Final Award. It was also submitted that the taxation of arbitration costs should be decided by the Court to ensure an expeditious and economical disposal of all applications related to the Final Award and that the arbitration costs sought to be taxed by the Defendant is reasonable. The Plaintiff merely disagreed with the arbitration costs without providing any reasons.

In full agreement with our 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. The High Court also taxed the arbitration costs at the full sum claimed by the Defendant.

[1] See: Article on A Flip Side of the Coin: Success in Resisting Setting Aside Application & Obtained Order to Enforce Arbitral Award in the sum Amounting to RM10 Million

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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