MALAYSIA Law and Practice Contributed by: Rabindra S. Nathan, Rodney Gomez, K. Shanti Mogan and Alexius Lee, Shearn Delamore & Co
5. Jurisdiction 5.1 Challenges to Jurisdiction
Negative Rulings on Jurisdiction The AA 2005 provides for an appeal against an arbitral ruling that it has jurisdiction. The converse (ie, a nega - tive ruling on jurisdiction) is not referenced as a ground for appeal under Section 18 (8). In PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597, the Singapore Court of Appeal accepted that pursuant to Article 16 (3) of the UNCITRAL Model Law, a negative jurisdictional rul - ing by a tribunal is intended to be a final and binding decision between the parties, and is not appealable. While the Singapore International Arbitration Act was amended in 2012 to allow appeals to the High Court on a negative jurisdictional ruling, no such amend - ment has been made to the AA 2005. 5.3 Timing of Challenge Pursuant to Section 18 (8) of the AA 2005, if the arbi - tral tribunal rules on a plea as a preliminary question that it has jurisdiction, parties have the right to go to court to challenge the jurisdiction of the arbitral tribu - nal within 30 days of receiving a notice of the arbitral tribunal’s ruling on the issue. If the arbitral tribunal determines such plea in an award on the merits, the parties may, within 90 days from the date of receipt of the award, make an application to the High Court to set aside such award (see Section 37 (4) of the AA 2005). 5.4 Standard of Judicial Review for Jurisdiction/Admissibility In Malaysia, the standard of review by the courts on questions of arbitral jurisdiction is generally de novo. In Usahasama SPNB-LTAT Sdn Bhd v ABI Construc- tion Sdn Bhd [2016] 7 CLJ 275, the High Court held that an appeal under Section 18 (8) of the AA 2005 involves a full rehearing of all issues afresh and unin - fluenced by the prior decision of the arbitrator(s). 5.5 Breach of Arbitration Agreement When there are court proceedings brought in breach of an arbitration agreement, it is mandatory for the Malaysian courts to stay such proceedings in favour of arbitration, unless it finds that the agreement is null and void, inoperative or incapable of being performed (see 3.3 National Court’s Approach ).
The principle of competence-competence is applica - ble in Malaysia with the enactment of Section 18 (1) of the AA 2005 – ie, an arbitral tribunal can rule on a party’s challenge to the tribunal’s own jurisdiction. This was affirmed in Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417. In discussing Section 18 of the AA 2005, the case of Tumpuan Megah Development Sdn Bhd v ING. Bank NV & Anor [2024] 3 CLJ 18 held that while an arbitral tribunal may decide on its jurisdiction under the prin - ciple of competence-competence, its decision is not final and can be challenged in the court of the seat of arbitration or the enforcement court. 5.2 Circumstances for Court Intervention Pursuant to Section 18 (7) of the AA 2005, the arbitral tribunal may rule on a plea that it does not have juris - diction or is exceeding the scope of its authority either as a preliminary question or in an award on the merits. Positive Rulings on Jurisdiction Where the arbitral tribunal rules on such a plea as a preliminary question that it has jurisdiction, any party may appeal to the High Court within 30 days of receiv - ing a notice of that ruling (see Section 18 (8) of the AA 2005). A decision of the High Court thereon is final and non-appealable (see Section 18 (10) of the AA 2005). On the other hand, if the arbitral tribunal decides to address such plea at the award stage, then the par - ties may apply to the High Court under Section 37 of the AA 2005 to set aside such award made by the arbitral tribunal. The courts generally show a reluctance to intervene in issues regarding the jurisdiction of an arbitral tribunal. In Capping Corp Ltd & Ors v Aquawalk Sdn Bhd & Ors [2013] 6 MLJ 579, the Malaysian Court of Appeal held that under the AA 2005, the courts are obliged to take a minimal interference approach, and such approach is reflected in Section 18 of the AA 2005, where the arbitral tribunal is empowered to rule on its own jurisdiction.
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