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Presentation of Prof. Mochtar Kusuma-Atmadja : Arbitration in the 1990s: Developments in East Asia : Arbitration in the Southeast Asian Region

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Malaysia

Malaysia has a framework of alternative dispute resolution through arbitration and it is quite common to find commercial agreements with provisions for referral of disputes to arbitration as opposed to litigation. Arbitration in Malaysia is governed by the Arbitration Act 1952, which governs the arbitral process and procedure. It should be noted that the provisions of this Act do not apply to arbitration held under the ICSID Convention, or to the UNCITRAL Arbitration Rules, or the Kuala Lumpur Regional Arbitration Centre (KLRAC) Rules. The KLRAC represents a separate forum for arbitration to those contemplated by the Arbitration Act 1952. Having been established in 1978, its rules are based on the UNCITRAL Arbitration Rules, 1976. Parties whose agreements make specific reference to arbitration at the KLRAC may avail of its services to resolve disputes under the KLRAC rules as an alternative to dispute resolution under the Arbitration Act 1952. This followed an amendment to the Act in 1980. It allowed the arbitral tribunal to conduct arbitration unfettered by court supervision, giving the arbitrators complete autonomy over the arbitral process.

The KLRAC was one of the first institutions to have adopted with some slight modifications the UNCITRAL Rules. The Malaysian Arbitration Act 1952 was amended by its Section 34 to respect the independence of the Centre entirely. Regional in character, the Centre was intended to offer a neutral forum for arbitration to foreign investors and in particular to their ASEAN partners. A unique feature of this institution is that, unlike most institutions, it is regional, inter-governmental and non-profit. Thus, parties arbitrating at Kuala Lumpur can be assured of a smooth flow of the arbitral process until an award is made, for it is not open to the parties to resort to the courts to delay or interfere with the arbitral proceedings. The advantage of applying UNCITRAL Rules is that it removes the uncertainty about the kind of procedural rules which are to apply in arbitration proceedings held at the Centre.

Malaysia has ratified the 1958 New York Convention and passed implementing legislation giving effects to its provisions. Under the Amendment to the Malaysian Arbitration Act, the procedure for the enforcement in Malaysia of an award in an arbitration held under the KLRAC Rules or under those of ICSID is in the High Court. The enforcement proceedings in respect of such awards are to be in accordance with the New York Convention or the ICSID Rules, as the case may be. The grounds for refusing recognition or enforcement would be those laid down under those two Conventions.

The Centre provides technical assistance in the holding of ad hoc arbitrations, assistance in the enforcement of awards within the countries served by the Centre, and the rendering of administrative services and assistance upon request to other institutions with whom appropriate arrangements have been made in regard to arbitral proceedings under the auspices of those institutions. The Centre has concluded mutual Cooperation Agreements with ICSID, Tokyo Maritime Arbitration Commission, Korean Commercial Arbitration Board, Japan Commercial Arbitration Association, Indian Council of Arbitration, Australian Centre for International Commercial Arbitration and American Arbitration Association for the provision of facilities in respect of the conduct of arbitral proceedings at the seat of one institution but under the auspices of another and for assistance in the enforcement of awards. Through these agreements, the Centre is able to offer a wide range of arbitral services of a commercial nature and also in such specialized fields as maritime arbitrations and those involving relationships between foreign investors and host governments.

The Centre maintains a common International Panel of Arbitrators drawn from the Asian-African Region as well as countries outside the region such as Australia, Canada, Federal Republic of Germany, the Netherlands, Romania, Sweden, United Kingdom, United States of America and Yugoslavia, and also the World Bank. The names of those on the Panel are included on the recommendations of the appropriate authorities in the respective governments of the AALCC. Foreigners can act as arbitrators in Malaysia and foreign lawyers can appear in arbitral proceedings conducted in Malaysia, though they cannot appear in court proceedings without leave of the court. In an international dispute arbitrated under the Act, the supportive role of the courts in recognizing the freedom of the parties to choose their lawyers to represent them in arbitration proceedings has been demonstrated.

Recent court decisions assist the development of international arbitration in Malaysia. The government's efforts at restructuring the legal environment in order to promote international arbitration is commendable, and the courts have shown that they will lend their support to the principle of greater party and arbitral autonomy in international disputes. The direction that arbitration in Malaysia, especially institutional arbitration, is taking is towards first principles arbitration as a service industry and accord it the flexibility of approach that characterizes conciliation or mediation.

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