Q.
Can arbitration proceedings and awards be appealed or challenged in the local court? What are the grounds and procedure? Can the parties effectively exclude any rights of appeal?
A.
Similar question was asked in 2012 Q5 on refusing recognition and enforcement of arbitral award.
Another posting is on setting aside arbitral award.
Technically, there is no right of appeal against an arbitral award. Or else there serves no purpose for arbitration as a type of Alternative Dispute Resolution (ADR). However, the following principles must be considered.
Amidst, if there is an appeal to the arbitral tribunal, such appeal can be later referred to the High Court within 30 days of the decision by the tribunal. In such case, the High Court would deliver a decision which cannot be appealed further. See earlier post on appeal to the tribunal here.
S.18 (10) No appeal shall lie against the decision of the High Court under subsection (8). So, what is s.18 (8)?
S.18 (8) Where the arbitral tribunal rules on such a plea as a preliminary question that it has jurisdiction, any party may, within thirty days after having received notice of that ruling appeal to the High Court to decide the matter.
An arbitral award can be set aside on various grounds by an application to the High Court (s.37(1).
The following grounds can be invoked:
Application for setting aside
37. (1) An award may be set aside by the High Court only if—
(a) the party making the application provides proof that-
(i) a party to the arbitration agreement was under any incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that party’s case;
(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
(v) subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration; or
(vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or
(b) the High Court finds that -
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or
(ii) the award is in conflict with the public policy of Malaysia.
In addition, a party can refer to the High Court any question of law arising out of an award - s.42. This section employs the term "reference" instead of "appeal", although judging from the remedies available under section 42, it effectively provides for an appeal.
Complaints of procedural unfairness should be brought under s.37 rather than s.42. Any decision made by the High Court under s.42 can be appealed to the Court of Appeal (s.43).
Reference on questions of law
42. (1) Any party may refer to the High Court any question of law arising out of an award.
(2) A reference shall be filed within forty-two days of the publication and receipt of the award, and shall identify the question of law to be determined and state the grounds on which the reference is sought.
(3) The High Court may order the arbitral tribunal to state the reasons for its award where the award—
(a) does not contain the arbitral tribunal’s reasons; or
(4) The High Court may, on the determination of a reference—
(b) vary the award;
(5) Where the award is varied by the High Court, the variation shall have effect as part of the arbitral tribunal’s award.
(6) Where the award is remitted in whole or in part for reconsideration, the arbitral tribunal shall make a fresh award in respect of the matters remitted within ninety days of the date of the order for remission or such other period as the High Court may direct.
(7) Where the High Court makes an order under subsection (3), it may make such further order as it thinks fit with respect to any additional costs of the arbitration resulting from that order.
(8) On a reference under subsection (1) the High Court may—
(a) order the applicant to provide security for costs; or
(b) order that any money payable under the award shall be brought into the High Court or otherwise secured pending the determination of the reference.
43. A decision of the High Court under section 42 shall be deemed to be a judgment of the High Court within the meaning of section 67 of the Courts of Judicature Act 1964 [Act 91].
Arbitration Procedures and Practice in Malaysia - Overview.
By ASHOK Kumar Mahadev Ranai, available at Practical Law, PLC
S.37, 39, 42 & 43 Arbitration Act, 2005.