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Malay Arb Standard Similar to US

Malaysian courts view arbitral vacatur in a manner similar to US courts.

A recent decision by the second-highest court in Malaysia illustrates a trend towards unification of arbitral standards, as well as why arbitration is favored by many international businesses.

Wing Construction v. Johor Port Authority (8 Jan 2010) involved a contract which was terminated in 1991. Following an arbitration, the losing party commenced suit in 2002. While lengthy court battles are not uncommon in the US, other jurisdictions often are even more slow to render a final judgment; this is one reason why many international businesses prefer arbitration as a speedy alternative.

The rationale of the Malay court is quite similar to what one would find in American jurisprudence.

The court gives great deference to the findings of fact and application of law by the arbitrator, and notes that where a court vacates an arbitral decision, it is in order to "ensure that the bounds of the law are maintained and preserved"-- a high threshold. The court goes on to state that the refusal of the judiciary to inquire into findings of fact made by the arbitrator is a matter of settled law.

The court decision could be word-for-word that of any American court:

(1) An arbitrator’s award is final, binding and conclusive and can only be challenged in exceptional circumstances. Even if an arbitrator had erred by drawing wrong inferences of fact from the evidence before him, be it oral or  documentary, that in itself would be not sufficient to warrant the setting aside of the award; and

(2) Where in deciding a dispute referred to him and the arbitrator has to determine a question of law that becomes material to his decision in the dispute, interference by the court is only possible if an error appears on the face of the award [cite omitted]

Wing Construction v. Johor Port Authority 8 Jan 2010.pdf36.71 KB
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