MALAYSIA Trends and Developments Contributed by: Rabindra S. Nathan, Rodney Gomez, K. Shanti Mogan and Alexius Lee, Shearn Delamore & Co
been converted into a judgment in a reciprocating country. The Court further clarified that Section 8 of the AA, which limits court intervention in matters governed by the Act, does not displace or impliedly repeal the REJA or relegate the AA as the sole source of enforcement of arbitral awards. The AA only governs domestic and international arbitral awards and does not assume jurisdiction over (and accordingly cannot affect) the registration of foreign judgments, includ - ing confirmation judgments based on arbitral awards, which were matters governed by the REJA. Recognising that the REJA and the AA are separate and distinct statutes providing for different modes of enforcement, the Federal Court held that there is neither conflict nor inconsistency between them that warrants either being made subject to the other. In the Federal Court’s words: “it would be misplaced to subject the REJA to the terms of the AA”. Accordingly, the court hearing an application under the REJA could not exercise the powers and jurisdiction of a court hearing a matter under Sections 37 to 39 of the AA, and the “passive remedy” recognised and used in the setting-aside of arbitral awards under the AA could not be read into the REJA, as the REJA contained its own provisions allowing for the non-registration of a judgment including a confirmation. Therefore, the Federal Court explained that, when a foreign arbitral award is enforced in Malaysia via a confirmation judgment under the REJA, the grounds for resisting enforcement are limited to those set out in Section 5 of the REJA. These include, among others, lack of jurisdiction and fraud. However, it was empha - sised that the Malaysian courts are not to conduct a full de novo rehearing of the issues already deter - mined by the arbitral tribunal or the foreign super - visory court. Instead, the review is confined to the records and evidence already before the tribunal and the foreign court, and the Malaysian court is not to act as an appellate tribunal on the merits of the dispute. In view of the need for finality in international arbitra - tion, the enforcing court should be slow to encourage a full-blown rehearing which would effectively amount to a second bite of the cherry in relation to issues that have been raised and disposed of.
In view of the foregoing, the Federal Court allowed the appeal and set aside the Court of Appeal’s decision. Relationship Between Limitation-of-Liability Clauses and Arbitral Jurisdiction and Severance of Awards Under the Arbitration The Court of Appeal in Gumusut - Kakap Semi - Floating Production System ( Labuan ) Ltd v Sabah Shell Petro- leum Co Ltd and another appeal [2026] 1 MLJ 710 addressed a pivotal issue of whether a limitation-of- liability clause in a contract operates as a jurisdictional limit on the arbitral tribunal or merely as a substantive defence on the merits. In that case, a dispute between the appellant (“GKL”) and the respondent (“SSPC”) was referred to arbitration pursuant to their contract. The contract contained a limitation-of-liability clause that capped GKL’s liability at USD200 million. How - ever, the arbitral tribunal awarded SSPC damages exceeding that contractual limit. GKL applied to set aside the award under Section 37 of AA, arguing that the tribunal had exceeded its jurisdiction by awarding damages beyond the agreed liability cap. The High Court dismissed the application. On appeal, the Court of Appeal was required to deter - mine whether an arbitral tribunal exceeds its jurisdic - tion when it grants relief that is inconsistent with a contractual limitation-of-liability clause. The majority of the Court of Appeal allowed GKL’s appeal in part and held that the arbitral tribunal had: • dealt with a dispute not contemplated by or not falling within the terms of submission (arbitration) regarding GKL’s maximum liability; and • exceeded the scope of the parties’ submission to arbitration by awarding damages beyond the con - tractual liability cap of USD200 million. The majority of the Court of Appeal adopted a busi - ness common sense interpretation of the contract and found that the parties had expressly agreed to limit GKL’s liability to that amount, subject to certain exceptions. In reaching its decision, the majority of the Court of Appeal emphasised that the terms and scope of the submission to arbitration are determined not only by
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