Announcement

RM 19.2 Million Arbitration Award Enforced – A Put Option Upheld

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7 March 2024

Our Partners, Idza Hajar Ahmad Idzam and Nan Muhammad Ridhwan together with their Legal Associates, Muhammad Hibri and Aiesyah Mustafa from Zul Rafique & Partners’ Litigation Practice Group succeeded in resisting Lingkaran Hartaniaga Sdn Bhd (“Plaintiff”)’s application to set aside the Arbitral Award dated 11.8.2023 (“Award”) made in favour of Lembaga Tabung Haji (“Defendant”) in the sum of RM19.2 million (“Award Sum”) and simultaneously obtained an order to enforce the Award.
 
The Plaintiff’s application to set aside the Award is based on inter alia, the allegation of violation of public policy, breach of natural justice and went beyond the scope of submission under Section 37(1)(a)(iv) and (v), Section 37(1)(b)(ii), and Section 37(2)(b) of the Arbitration Act 2005.
 
The Defendant submitted the following in response to the issues raised by the Plaintiff in the Plaintiff’s application to set aside the Award:
 
(a) The Award did not go beyond the scope of submission when the Arbitrator awarded consequential reliefs to parties. Such consequential reliefs was connected with the subject matter of the dispute and was not a radical departure from the submission of parties. In this regard, the Arbitrator granted consequential reliefs to enforce the Put Option mechanism upon payment of monies being made by the Plaintiff, as the dispute was concerning the enforcement of a Put Option. There really was nothing that went beyond the scope of the arbitration when the Arbitrator awarded the consequential relief;
 
(b) Natural justice does not obligate the Arbitrator to make comprehensive responses to each and every argument raised by the Plaintiff. The Arbitrator spent at great length to consider all evidence and submissions produced by parties. The Arbitrator’s preference for the Defendant’s submissions does not constitute a breach of natural justice; and
 
(c) The Arbitrator did not commit a breach of natural justice or public policy when he refused to consider a point that was not pleaded by the Plaintiff and only was brought up during the hearing of the arbitration. It is trite law that parties are bound by their pleadings and the Defendant will be severely prejudiced if the Arbitrator elected to consider the argument as the Defendant was not afforded the opportunity to respond to the same in its pleadings and to present evidence on the same.
 
The High Court agreed that the issues raised by the Plaintiff did not amount to breaches of natural justice or public policy and did not go beyond the scope of arbitration and dismissed the Plaintiff’s application to set aside the Award. The High Court also allowed the Defendant’s application to enforce the Award.

For more insights into this area of law, please contact our Litigation Partners:
P Jayasingam
Wong Keat Ching
Thavaselvi Pararajasingam
Idza Hajar Ahmad Idzam
Nan Muhammad Ridhwan Rosnan

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