MALAYSIA Law and Practice Contributed by: Rabindra S. Nathan, Rodney Gomez, K. Shanti Mogan and Alexius Lee, Shearn Delamore & Co
The court has a discretion to adjourn the recognition and enforcement of an arbitration award in Malaysia pursuant to Section 39 (2) of the AA 2005 where the award is subject to ongoing set-aside proceedings at its seat. However, the courts do not have the jurisdiction to permanently injunct an application to recognise and enforce an arbitral award on the basis that the award sum is allegedly not due ( Southern HRC Sdn. Bhd. v The public policy considerations that domestic courts apply in refusing to enforce foreign arbitral awards are based not on domestic public policy but on interna - tional norms; conflict with public policy is defined as violating the most basic notions of morality and justice, or as that which would shock the public conscience or be injurious to the public good. Thus, instances such as “patent injustice”, “manifestly unlawful and unconscionable”, “substantial injustice”, “serious irregularity” and other similar serious flaws in the arbi - tral process and award would fall within the applicable concept of public policy ( Jan De Nul (Malaysia) Sdn Bhd v Vincent Tan Chee Yioun [2019] 2 MLJ 413). In Master Mulia Sdn Bhd v Sigur Rus Sdn Bhd [2020] 12 MLJ 198, the Malaysian Federal Court confirmed that the Malaysian courts may set aside an arbitra - tion award that was made in breach of natural justice but this would only be done where the breach had material and causative effect on the outcome of the arbitration. 13. Miscellaneous 13.1 Class Action or Group Arbitration The possibility of class action arbitration or group arbi - tration remains untested in Malaysia. 13.2 Ethical Codes It is implicit in the AA 2005 that an arbitrator must be impartial; the requirement to disclose any circum - stances that are likely to give rise to justifiable doubts regarding that person’s impartiality or independence makes this clear. Good faith requirements are also Danieli Co., Ltd [2023] 2 CLJ 831). 12.3 Approach of the Courts
mandated by the AA 2005. Arbitrations pursuant to the AIAC are bound by the Asian International Arbitra - tion Centre’s Code of Conduct for Arbitrators, which references the IBA Guidelines on Conflict of Interest in International Arbitration. Advocates and solicitors in Malaysia who act as coun - sel in arbitration proceedings remain bound by the ethical codes and professional standards governing advocates and solicitors contained in the Legal Pro - fession Act 1976. 13.3 Third-Party Funding The AA 2005 (in its current form) is silent on whether third-party funding or champerty is permissible in Malaysia. Pursuant to the Arbitration (Amendment) Act 2024, the new Sections 46A to 46I of the AA 2005 will provide a comprehensive framework for regulating third-party funding in Malaysia. The Arbitration (Amendment) Act 2024 provides that the common law rule against main - tenance and champerty shall cease to apply, meaning that future third-party funding agreements shall not be treated as being contrary to public policy on the grounds of maintenance and champerty (Section 10 of the Arbitration (Amendment) Act 2024). Where the funded party has made a third-party fund - ing agreement, the funded party shall disclose or com - municate to the other party to the arbitration and the arbitral tribunal or the court before which proceedings are brought in respect of the arbitration, as the case may be, the fact that a third-party funding agreement has been made and the name of the third-party funder in the third-party funding agreement. The disclosure or communication shall be made where the third-party funding agreement is made on or before the com - mencement of the arbitration or court proceedings in respect of the arbitration, upon the commencement of the arbitration or court proceedings or where the third-party funding agreement is made after the com - mencement of the arbitration or court proceedings in respect of the arbitration, within fifteen days after the third-party funding agreement is made. To regulate third-party funding, the Minister may issue, revoke, vary, revise or amend a code of practice set -
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