MALAYSIA Law and Practice Contributed by: Rabindra S. Nathan, Rodney Gomez, K. Shanti Mogan and Alexius Lee, Shearn Delamore & Co
is contrary to public policy or the subject matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia (see Section 4 of the AA 2005). The fact that any written law confers jurisdiction in respect of a matter on any court of law but does not refer to the determination of that matter by arbitration does not indicate that a dispute about that matter is incapable of determination by arbitration. Public Policy There is no universally accepted test on what public policy is; different courts and different tribunals may have different views as to the enforceability of con - tracts on the ground of public policy (see the Malay - sian Federal Court judgment in Arch Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 1 CLJ 305). The AA 2005 does not identify any specific subject matter that cannot be referred to arbitration. Matters that may have public interest elements have been identified as being non-arbitrable in the Court of Appeal case of Peninsula Education (Setia Alam) Sdn Bhd (previously known as Segi International Learning Alliance Sdn Bhd) v Biaxis (M) Sdn Bhd (in liquidation) [2024] 5 MLJ 388, such as the grant of a dissolution of marriage, orders with respect to adoption, judicial review matters involving certiorari and mandamus, contempt of court, registration and expunging of pat - ent and other intellectual property rights, order for sale under the National Land Code, issues arising out of liquidation, judicial management or receivership under the Companies Act 2016. In Arch Reinsurance Ltd v Akay Holdings Sdn Bhd [2019] 1 CLJ 305, the Malaysian Federal Court held that the provisions of the National Land Code setting out the rights and remedies of parties under statutory charge over land are exhaustive and exclusive and any attempt to contract out of these rights is void as being contrary to public policy; and hence a dispute triggered by a statutory notice of demand under the National Land Code is not arbitrable under the AA 2005. Based on this decision, the Malaysian courts have taken the position that where there are statu - tory provisions that exhaustively set out procedures involving the rights and remedies of parties, then that subject matter will most likely not be arbitrable.
Recently, in V Medical Services M Sdn Bhd v Swis- sray Asia Healthcare Co Ltd [2025] 2 MLJ 744, the Federal Court held that the provisions of the AA 2005 do not purport to extend its reach to the insolvency provisions under the Companies Act 2016; its provi - sions ought not to be invoked or incorporated into the exercise of discretion in determining whether to grant a Fortuna injunction, or stay, dismiss or allow a winding-up petition, reinforcing the proposition that insolvency proceedings under the Companies Act 2016 are non-arbitrable. The Tribunal’s Powers to Determine Arbitrability If the issue of whether a dispute is arbitrable or not is raised by any party, the arbitral tribunal has the power to rule on its own jurisdiction, which includes decid - ing whether a dispute is arbitrable. Within 30 days of receiving notice of the arbitral tribunal’s ruling that there is jurisdiction, any party may appeal to the High Court to decide the matter. 3.3 National Courts’ Approach Law of Arbitration Agreement The 2024 Amendments provide for the default provi - sion where the law applicable to the arbitration agree - ment shall be the law of the seat of the arbitration in the absence of an agreement by the parties (Section 5 of the Arbitration (Amendment) Act 2024). As the 2024 Amendments have not come into force, the conflict of laws rules have been used by Malaysian courts with respect to determining the law governing arbitration agreements. The general principle is that, in the absence of an express choice of the governing law of the arbitration agreement or any contrary indication, the law that has the closest and most real connection with the arbitration agreement is the law of the seat of the arbitration – ie, the lex arbitrii (see the Malaysian Federal Court decision in Thai-Lao Lignite Co Ltd & Anor v Government of The Lao People’s Democratic Republic [2017] 9 CLJ 273). Enforcement of Arbitration Agreements Arbitration agreements are frequently enforced by the Malaysian courts. Where court proceedings are brought in respect of a matter that is the subject of an arbitration agreement and a party makes an applica - tion to stay the court proceedings, where there is valid
471 CHAMBERS.COM
Powered by FlippingBook