Malaysian Arbitration Act - Summary of Key Changes in 2024
Sections 2,
13
The Asian International
Arbitration Centre (Malaysia) will be replaced by the Asian International
Arbitration Centre Court of Arbitration.
"The Director of
AIAC" will be replaced by the term "President", which refers to
the President of the, who will replace the Director of the Asian International
Arbitration Centre (Malaysia).
The change aligns with the
restructuring initiatives of the Asian International Arbitration Centre, as
outlined in the Supplementary Agreement between the Government of Malaysia and
the Asian-African Legal Consultative Organization.
Sections
9(4)(b) & 9A
Section 9(4)(b) reflects the inclusion of 'any other
documents' as constituting an arbitration agreement in writing.
Previously the subsection considered an arbitration
agreement in writing is found if it was contained in an exchange of statements
of claim and defence in which the existence of an agreement is alleged by one
party and not denied by the other.
With this amendment, an arbitration agreement can now be
established through any other documents in which one party alleges the
existence of an agreement, and the other party does not deny it.
In addition, much needed clarity to the law applicable to
arbitration agreement has been introduced via section 9A which provides that:
a.
Parties in arbitration have the
freedom to agree on the governing law for their arbitration agreement, failing
which this will be the law of the seat of the arbitration.
b.
The governing law of the main
agreement is not the law of the arbitration agreement.
Appointment
and Repetition of Hearings for Replaced Arbitrators, Sections 13(3A) and 17(2)
A new subsection 13(3A) clarifies that where there are
multiple claimants and multiple respondents, all claimants shall jointly
appoint one arbitrator and all respondents shall jointly appoint one
arbitrator.
Subsection 17(2) of the Act now provides for a discretion
to repeat hearings previously held where any arbitrator (including the
presiding arbitrator) is replaced. Previously, it was mandatory to repeat
hearings where a single or presiding arbitrator is replaced. This is of course
subject to the parties' agreement.
This change is a significant step towards expediting the
arbitration process in Malaysia by eliminating unnecessary or irrelevant
repetitions of previous hearings following the replacement of an arbitrator.
Additionally, it may prevent the parties from incurring unnecessary extra costs
during the proceedings.
Sections
33(2A) & 33(9)
The insertion of subsection 33(2A) and 33(9) provide that
the signatures of the arbitrator on an award shall include the digital and
electronic signatures of the arbitrators on the award. "Digital
signature" shall have the meaning assigned to it in the Digital Signature
Act 1997 whilst "electronic signature" shall have the meaning
assigned to it in the Electronic Commerce Act 2006.
This amendment is particularly relevant in the context of
today's rapidly evolving technological landscape, where agreements are
increasingly being signed electronically or digitally through platforms. The
clarity this amendment brings is instrumental in averting disputes over the
validity of signature forms during arbitration proceedings and supports
environmental sustainability.
Recognition
and Enforcement, Section 38(1)
An Arbitration Award (where the seat of arbitration is in
Malaysia or an award from a foreign State) is now expressly said to be binding,
without the need for an application to the High Court.
However, an application in writing to High Court is still
required to enforce the award pursuant to Section 38 of the Act.
In contrast, under the pre-amended provision, recognition
and enforcement both required an application in writing to the High Court. The
change harmonizes this provision with the UNCITRAL Model Law.
Rule
against Maintenance and Champerty shall Cease to Apply, Section 46C
A new chapter, "Third Party Funding", is
introduced after section 46 of the Act as sections 46A – 46I.
Third party funding of arbitration and court proceedings
in respect of an arbitration shall no longer be prohibited in Malaysia.
Section 46(c) provides that the rule of common law against
maintenance and champerty shall cease to apply in relation to the third party
funding of arbitration and that a third party funding agreement shall not be
treated as contrary to public policy on the grounds of maintenance and
champerty. This does not apply to third party funding agreements made before
the date of this Chapter (Section 46(b)
and relevant definitions are defined in Section 46(a)).
Sections
46D and 46E
The new section 46D provides for the power of the Minister
to issue a code of practice setting out the practices and standards relating to
third party funding in which third party funders are ordinarily expected to
comply.
This Code would be admissible in evidence in proceedings
before court or arbitration, and may cover:
a.
Requirements on promotion of
the third party funding;
b.
Requirements for a third party
funding agreement (such as the degree of control that a Funder will have on an
arbitration, the liability of a funded party, and termination of the
agreement);
c.
Criteria on a third party
funder including the sufficient maximum amount of capital which shall be
satisfied by the Funder;
d.
Procedures for addressing
conflicts of interests (potential/ perceived/ actual) by a Funder;
e.
Procedures for enhancing the
protection of a funded party.
In the event of non-compliance with the Code, Section 46E
provides that a third party funder shall not be rendered liable to any action
or legal proceedings. However, the arbitral tribunals have the discretion to
consider any compliance or non-compliance which are relevant to the questions
being decided.
Sections
46F, 46G, 46H and 46I
In summary, these sections address the disclosure of
information:
a.
46F- on information for the
purpose of seeking or securing third party funding;
b.
46G- on the funding agreement
to the other party to the arbitration, arbitration tribunal and court;
c.
46H- on the termination of the funding agreement
to the arbitration, arbitration tribunal and court;
Whereas 46I provides for the effect of non-compliance.
46F allows disclosure of any information relating to the
arbitration proceedings or an award to any person for the purpose of seeking or
securing funding from that person. That person shall not further disclose the
information unless:
a.
it is made to protect/ pursue a
legal right of that person; where that person is obliged by law to do so to a
government body/ regulatory body/ tribunal/ court;
b.
it is made to a professional or
any other adviser for purposes of obtaining advice relating to the third party
funding.
Similar considerations would apply to that professional or
any other adviser in receipt of such information.
46G provides that the funded party must disclose (i) the
fact that there is a third party funding agreement; (ii) the name of the third
party funder, upon the commencement of arbitration or court proceedings or
within 15 days after the Agreement is made (where this is made after the
commencement of proceedings) or immediately after the arbitral tribunal is
appointed (where the appointment of the tribunal was not previously done).
46H provides that the funded party must disclose (i) the
termination/ end of a third party funding agreement; (ii) the date, within 15
days after such termination/ end.
Lastly, in the event of non-compliance, Section 46I
mirrors Section 46E to the effect that a third party funder shall not be
rendered liable in any action or legal proceedings, and that arbitral tribunals
have the discretion to consider any compliance or non-compliance which are
relevant to the questions being decided.
Immunity of
Arbitral Institutions, Section 48
Section 48 now provides for broader immunity by deleting
the reference made to the Director of AIAC, thereby leaving the amended
provision merely refer to "any person".
This means that any person or institution acting as an
appointing authority authorized by the parties, enjoys immunity from liability
for their actions or omissions in discharging their functions—unless there is
evidence of bad faith.
All appointments, decisions, and actions previously
carried out by the Director of the AIAC will- on the date of coming into
operation of the Act- be attributed to the President of the Asian International
Arbitration Centre Court of Arbitration- unless revoked, amended, repealed,
rescinded or replaced by the said President.
In addition, the law governing arbitration agreements made
before the enactment of this Act continues to be governed by the principal Act,
unaffected by these changes.
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