Recourse against award in an arbitration

In an arbitration, an appeal has been made to the High Court. In what circumstances can the High Court set aside the decision of the arbitral tribunal?

A.
Past Year 2012 Q5(a) had similar question. However, one is about setting aside the arbitration award - s.37 and this question is about ground for refusing recognition or enforcement of awards (s.39).

Both the reasons are similar, but the stages of the process are different - s.37 is about setting aside the award before it is recognized and enforced. S.39 is about refusing the enforcement.

See another post on Appeals here.

Chapter 7

Recourse against award

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.

(2) Without limiting the generality of subparagraph (1)(b)(ii), an award is in conflict with the public policy of Malaysia where—

(a) the making of the award was induced or affected by fraud or corruption; or

(b) a breach of the rules of natural justice occurred— (i) during the arbitral proceedings; or

(ii) in connection with the making of the award.

(3) Where the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside.

(4) An application for setting aside may not be made after the expiry of ninety days from the date on which the party making the application had received the award or, if a request has been made under section 35, from the date on which that request had been disposed of by the arbitral tribunal.

[Section 35 is about correction of error in award granted by the tribunal. Within 30 days of the award, if there is error in the award, e.g. typo mistake or calculation mistake, either party can appeal to the arbitral tribunal for correction. Therefore, the 90 days can be calculated from the date of award, or the date of award being corrected.]

(5) Subsection (4) does not apply to an application for setting aside on the ground that the award was induced or affected by fraud or corruption.

(6) On an application under subsection (1) the High Court may, where appropriate and so requested by a party, adjourn the proceedings for such period of time as it may determine in order to allow the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

(7) Where an application is made to set aside an award, the High Court may order that any money made payable by the award shall be brought into the High Court or otherwise secured pending the determination of the application.

Ref:

Section 37, Arbitration Act, 2005.