Q.
Are there any legal requirements relating to the form and consent of an arbitration agreement? What provisions are required for an arbitration agreement to be binding and enforceable?
A.
The Act that provides for guidance is the Arbitration Act, 2005. Section 9 of this Act provides a statutory and form of an arbitration agreement. This is modeled after Article 7 of the Model Law on International Commercial Arbitration (1985), by UNICITRAL - United Nations Commission on International Trade Law.
So, s.9 Arbitration Act 2005 spells out what are required of an arbitration agreement to make it legal and enforceable. The other section, s.39 is the reverse. It spells out what are the grounds that arbitration agreements cannot be enforced and thus be refused as null and void. Therefore, to ensure an arbitration agreement is sound and good, it should follow s.9 at the same time not contravene s.39.
Both s.9 and s.39 are extracted below.
Arbitration agreement
Definition and form of arbitration agreement
9. (1) In this Act, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in an agreement or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing where it is contained in—
- (a) a document signed by the parties;
- (b) an exchange of letters, telex, facsimile or other means of communication which provide a record of the agreement; or
- (c) an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
(5) A reference in an agreement to a document containing an arbitration clause shall constitute an arbitration agreement, provided that the agreement is in writing and the reference is such as to make that clause part of the agreement.
Grounds for refusing recognition or enforcement
39. (1) Recognition or enforcement of an award, irrespective of the State in which it was made, may be refused only at the request of the party against whom it is invoked—
(a) where that party provides to the High Court 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 (2), the award contains decisions on matters beyond the scope of the submission to arbitration;
- (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
- (vii) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or
(b) if 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
S.9 and S.39 Arbitration Act 2005.