Q.
Will the local courts intervene to assist arbitration proceedings? Can a party in arbitration delay proceedings by frequent court applications? Provide a case for your discussion.
A.
Section 8 of the Arbitration Act 2005 clearly states that unless otherwise provided, no court will intervene in any of the matters government by Arbitration Act, 2005.
Extent of court intervention
8. Unless otherwise provided, no court shall intervene in any of the matters governed by this Act.
This section 8 should put an end to any argument as to the existence of a sweeping inherent power of the court to take over or intervene in arbitrations even if not authorized under Arbitration Act, 2005.
Arbitration agreement and substantive claim before court
10. (1) A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds—
(a) that the agreement is null and void, inoperative or incapable of being performed; or
(b) that there is in fact no dispute between the parties with regard to the matters to be referred.
(2) The court, in granting a stay of proceedings pursuant to subsection (1), may impose any conditions as it deems fit.
(3) Where the proceedings referred to in subsection (1) have been brought, arbitral proceedings may be commenced or continued, and an award may be made, while the issue is pending before the court.
This is seen in CMS Energy Sdn Bhd v Poson Corporation (2008), where the dispute was under arbitration and CMS Energy went to court to ask for injunction, and was granted ex parte* injunction. Poson challenged the injunctions with S.10 of Arbitration Act, 2005 and was successful in setting aside the injunction. The arbitration proceeding ensued.
*Ex Parte /ˌɛks ˈpɑːrtiː/ is a Latin legal term meaning "from (by or for) [the/a] party". An ex parte decision is one decided by a judge without requiring all of the parties to the controversy to be present. In Australian, Canadian, U.K., South African, Indian and U.S. legal doctrines, ex parte means a legal proceeding brought by one person in the absence of and without representation or notification of other parties. It is also used more loosely to refer to improper unilateral contacts with a court, arbitrator or represented party without notice to the other party or counsel for that party.
Wikipedia search on Ex Parte, available at
CMS Energy v Poson, as extracted from Malaysian Construction and Contract Law website.
CMS Energy Sdn Bhd v Poscon Corp [2008]
CMS Energy Sdn Bhd was granted an injunction on an ex parte basis and applied for the injunction to continue. Poscon Corp applied for a stay of proceedings in accordance to Section 10 of the Arbitration Act 2005.
CMS Energy Sdn Bhd and Poscon Corp being a Korean company registered in Korea together with another company called Special Triumph Sdn Bhd had set up a joint venture and awarded a subcontract to this same joint venture company. The subcontract was then further subcontracted by the joint venture to Poscon Corp.
CMS Energy Sdn Bhd contended that Poscon Corp could not rely on Section 10 of the Arbitration Act because there was no arbitration agreement between Poscon Corp and CMS Energy Sdn Bhd. They argued that the arbitration agreement, if any, was between Poscon Corp and the joint venture company and that CMS Energy Sdn Bhd was not party to any such arbitration agreement. In response, Poscon Corp claimed that there was no joint venture company as alleged by CMS Energy Sdn Bhd, as it was never set up. CMS Energy Sdn Bhd had subcontracted the subcontract to Poscon Corp and that the purchase orders purportedly raised by the joint venture company were in fact issued by CMS Energy Sdn Bhd to Poscon Corp in Korea.
The court held that after looking at the provisions of the Arbitration Act, and in particular Section 10 (the provision on stay) together with Section 18 (the provision on arbitrators’ powers), the act clearly intended for courts to favour arbitration proceedings. The stay was granted and the injunction set aside.
(Verbatim from Malaysian Construction and Contract Law)
Even if a court proceeding is brought, arbitral proceedings can be commenced or continued and an award made while the issue is still pending in court (s.10(1). This section ensures the continuity of the arbitration proceedings and avoids the arbitral proceedings being protrated.
Arbitration Procedures and Practice in Malaysia - Overview.
By ASHOK Kumar Mahadev Ranai, available at Practical Law, PLC
CMS Energy v Poson (2008), from Malaysian Construction and Contract Law, available from