JUDICIAL INTERPRETATIONS ON QUESTION OF LAW UNDER...
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JUDICIAL INTERPRETATIONS ON QUESTION OF LAW UNDER SECTION 42 OF ARBITRATION ACT 2005 YEOH ZI YEE UNIVERSITI TEKNOLOGI MALAYSIA
Transcript of JUDICIAL INTERPRETATIONS ON QUESTION OF LAW UNDER...
JUDICIAL INTERPRETATIONS ON QUESTION OF LAW
UNDER SECTION 42 OF ARBITRATION ACT 2005
YEOH ZI YEE
UNIVERSITI TEKNOLOGI MALAYSIA
JUDICIAL INTERPRETATIONS ON QUESTION OF LAW
UNDER SECTION 42 OF ARBITRATION ACT 2005
YEOH ZI YEE
A master’s project report submitted in fulfillment of the
requirements for the awards of the degree of
Master of Science in Construction Contract Management
Faculty of Built Environment
Universiti Teknologi Malaysia
SEPTEMBER 2017
iii
DEDICATION
For my family, who offered me unconditional love and support throughout the
completion of this project report. To them I give all my love for supporting me all the
way.
To My Lovely Father and Mother,
Mr. Yeoh Liang Bong & Mrs. Chia Mooi Lan
To My Sisters,
Yeoh Zi Wei, Yeoh Zi Kean & Yeoh Kian Joo
To My Brothers,
Yeoh Zhang Hong & Yeoh Zhang Yue
I extend my deepest appreciation to each of the above.
iv
ACKNOWLEDGEMENT
My deepest appreciation goes out to all those people that had assisted,
guided, supported and encouraged me in the preparation and submission of this
research.
First and foremost, I would like to thank to my supervisor, Dr. Hamizah
Liyana Binti Tajul Ariffin whom, as project report supervisor, had given me
professional advise, guidance and continuous support until the completion of this
project. Also, I would like to thank Dr Norazam Othman, whom as second reader,
had giving me constructive opinions to complete this study. Thank you for their
encouragements.
Secondly, I would like to thank Madam Hyacinth Tan and Madam Verene
Kuo, whom as my boss and people manager, had given me a change to work as a part
time quantity surveyor in order to gain working experience while I am doing my
master programme. Thank you for their great arrangement.
Next, I would like to extend my utmost gratitude to my family members who
had given boundless support and encouragements throughout the study. Besides, my
appreciation also go towards the help, guidance and endless support given by my
friends.
Last but not least, I would like to sincerely thank to my fellow coursemates
and friends that provide a helping hand and assistance in order to make this study
possible. Thank you so much.
v
ABSTRAK
Penimbang tara mesti menghasilkan satu award dengan secara jelas, tepat, adil dan
berkuatkuasa. Award yang dibuat dan diterbit adalah muktamad dan mengikat serta
berkuatkuasa seperti keputusan Mahkamah Tinggi. Namun demikian, award tersebut
masih boleh dicabar sekiranya terdapat persoalan undang-undang di mana mahkamah
boleh mengetepikan atau meremitkan award itu kepada penimbang tara untuk
dipertimbangkan semula. Kedua-dua Akta 1952 dan Akta 2005 tidak ada peruntukan
untuk mengehadkan dan tidak ada definisi yang jelas tentang makna sebenar
"persoalan undang-undang". Oleh itu, tidak ada garis panduan yang jelas untuk
memutuskan sama ada award tersebut boleh timbul sebagai persoalan undang-
undang dan bolehkah dicabar di bawah alasan ini. Biasanya perkara ini diputuskan
oleh mahkamah. Oleh itu, kajian ini bertujuan untuk mengenalpasti tafsiran hakim
terhadap ―persoalan undang-undang di bawah seksyen 42 Akta Timbang Tara
2005". Kajian ini dijalankan melalui analisis dokumen, iaitu laporan dan jurnal
undang-undang. Keputusan menunjukkan bahawa terdapat enam tafsiran kehakiman
utama untuk "persoalan undang-undang" seperti sokongan mesti dinyatakan secara
sama, mesti persoalan undang-undang dan bukannya persoalan sah, mahkamah mesti
menolak persoalan sekiranya penentuan persoalan undang-undang tidak memberi
kesan yang besar ke atas hak-hak pihak, intervensi oleh mahkamah hanya boleh
dilakukan jika terdapat kesalahan yang nyata dan tidak dapat disangkal, penimbang
tara tetap menjadi penentu persoalan fakta dan bukti dan penerapan prinsip undang-
undang oleh penimbang tara mungkin salah (dalam kes penemuan fakta bercampur
dan undang-undang), mahkamah tidak boleh campur tangan melainkan keputusan
adalah sesat. Adalah dicadangkan bahawa semua tafsiran tersebut dimasukkan ke
dalam Akta Timbang Tara supaya boleh dijadikan sebagai garis panduan bagi pihak
yang ingin mencabar award di bawah alasan persoalan undang-undang.
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ABSTRACT
In making an arbitration award, the arbitrator must define it clearly, unambiguously,
justly and enforceability. Once the award is made and published, is a final and
binding document and enforceable as a judgment of the High Court. However, the
award can still be challenged when an award contain question of law where a court
can set aside or remit the award to the arbitrator for further consideration. There is no
provision in both 1952 Act and 2005 Act to limit and no clear definition as to what
exactly means by ―question of law‖. Thus, it does not provide guidelines for the
losing party to decide whether the award can arise as question of law and should they
challenge the arbitral award under this ground. Normally it is for the court to decide.
Hence, this research intends to determine the judicial interpretations on ―question of
law under section 42 of Arbitration Act 2005‖. This research was carried out mainly
through documentary analysis of law journals and law reports. Results show that
there are six main judicial interpretations for ―question of law‖ which include the
grounds in support must also stated on the same basis, the question of law must be
legitimate question of law, and not a question of fact ―dressed up‖ as a question of
law, the court must dismiss the reference if a determination of the question of law
will not have a substantial effect on the rights of parties, the intervertion by the court
must only be if the award is manifestly unlawful and unconscionable, the arbitral
tribunal remains the sole determiners of questions of fact and evidence and while the
findings of facts and application of legal principles by the arbitral tribunal may be
wrong (in Instances of findings of mixed fact and law), the court should not intervene
unless the decision is perverse). It is recommended that the six judicial
interpretations should be included in the Arbitration Act so that it can be the
guidelines for the party who wish to challenge the award under the ground of
question of law on the face of award.
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
THESIS DECLARATION
SUPERVISOR’S DECLARATION
TITLE PAGE i
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRAK v
ABSTRACT vi
TABLE OF CONTENTS vii
LIST OF CASES xi
LIST OF TABLES xvi
LIST OF FIGURES xvii
LIST OF ABREVIATIONS xviii
1.0 INTRODUCTION
1.1 Background of the Study 2
1.2 Problem Statement 6
1.3 Research Question 9
1.4 Research Objective 9
1.5 Scope of the Study 10
viii
1.6 Significant of Study 10
1.7 Research Methodology 10
1.7.1 Identify Research Issue 12
1.7.2 Data Collection 12
1.7.3 Data Analysis 12
1.7.4 Writing 13
1.8 Organisation of Chapters 13
2.0 THE ARBITRATION AWARD
2.1 Introduction 16
2.2 Definition of Award 16
2.2.1 Purpose of an Award 18
2.2.2 Types of Awards 19
2.3 Challenging of Arbitral Award 24
2.3.1 Meaning of Challege 24
2.3.2 Purpose of Challenge 25
2.3.3 Challenging an Award 26
2.4 Concluding Remarks 30
3.0 CHALLENGING OF ARBITRAL AWARD (QUESTION OF LAW)
3.1 Introduction 33
3.2 Arbitration Act in Malaysia 33
3.2.1 Legislative History of Arbitration in Malaysia 34
3.3 Meaning of Question of Law 36
3.4 The Distinction between Law and Fact 43
3.5 Provision of Question of Law in Malaysia 45
3.5.1 Steps in Identify Question of Law (Based on AA 2005) 48
3.6 Provision of Question of Law in Singapore 49
3.7 Procedure of Challenging Award on Question of Law 57
3.8 Concluding Remarks 59
ix
4.0 RESEARCH METHODOLOGY
4.1 Introduction 61
4.2 Approaches to Legal Research 61
4.2.1 Overview Approach 62
4.2.2 Topic Approach 62
4.2.3 Descriptive Approach 63
4.2.4 Analytic and Critical Approach 63
4.2.5 Historical Approach 64
4.3 Research Scope 65
4.4 Research Procedure 65
4.4.1 Phase 1: Preparation of Research Proposal 65
4.4.2 Phase 2: Literature Review 66
4.4.3 Phase 3: Data Collection 67
4.4.4 Phase 4: Data Analysis 74
4.4.5 Phase 5: Conclusion and Recommendation 74
5.0 DATA ANALYSIS AND FINDINGS
5.1 Introduction 76
5.2 Judical Interpretations of ―Question of Law‖ of The Arbitration
Award 76
5.2.1 Case 1: Chain Cycle Sdn Bhd v Kerajaan Malaysia 77
5.2.2 Case 2: Magna Prima Construction Sdn Bhd v Bina BMK
Sdn Bhd and another case 89
5.2.1 Case 3: MMC Engineering Group Bhd & Anor v Wayss &
Freytag (M) Sdn Bhd 96
5.2.1 Case 4: Kerajaan Malaysia v Perwira Bintang Holdings
Sdn Bhd 103
5.2.1 Case5: SDA Architects (sued as a firm) v Metro
Millennium Sdn Bhd 110
5.2.1 Case 6: Lembaga Kemajuan Ikan Malaysia v WJ
Construction Sdn Bhd 114
5.2.1 Case 7: LW Infrastructure Pte Ltd v Lim Chin San
Contractors Pte Ltd 126
x
5.2.1 Case 8: Engineering Construction Pte Ltd v Sanchoon
Builders Pte Ltd 131
5.3 Summary of the Case Analysis 137
5.4 Concluding Remarks 142
6.0 CONCLUSION AND RECOMMENDATIONS
6.1 Introduction 145
6.2 Research Conclusion 145
6.3 Problems Encounter 152
6.4 Recommended Future Research 152
6.5 Concluding Remarks 153
REFERENCES
xi
LIST OF CASES
Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd [2000] 1 SLR 749
Ajzner v Cartonlux Pty Ltd [1972] VR 919
Antara Steel Mills Sdn Bhd v CIMB Insurance Brokers Sdn Bhd [2015] 6 248
Arenson v Arenson. [1990] 787 S.W.2d 845
British Glanzstoff Manufacturing Company, Limited v General Accident, Fire and
Life Assurance Corporation, Limited [1913] AC 143
BTP Tioxide Ltd v Pioneer Shipping Ltd [1981] 2 Lloyd’s Rep 239
Cartwright v MacCormack [1963] 1 All ER 11
Chai Ming v The Overseas Assce. Corporation Ltd [1962] MLJ 282
Chain Cycle Sdn Bhd v Kerajaan Malaysia [2016] 1 MLJ 681
Chain Cycle Sdn Bhd v Government of Malaysia [2015] 9 MLJ 214
Chiam Tau Tze & Anor v The Sarawak Land Consolidation and Rehabilitation
Authority and Another Case [1994] 3 CLJ 605
xii
CK Tay Sdn Bhd v Eng Huat Heng Construction & Trading Sdn Bhd [1989] 1 CLJ
349
Collector of Customs v Agfa-Gavaert Ltd 186 CLR 389 at 396
Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] 43 FCR 280
Collins v Collins 28 LJ Ch 184. [2000] NZCA 131
Dawson v Wright [1983] QB 1065
Desa Teck Guan Koko Sdn Bhd v Syarkat Hup Foh Hing [1994] 2 MLJ 246
Engineering Construction Pte Ltd v Sanchoon Builders Pte Ltd [2010] SGHC 293
Exceljade Sdn Bhd v Bauer (Malaysia) Sdn Bhd [2014] 1 AMR 253
Far East Holdings Bhd & Anor v Majlis Ugama Islam Dan Adat Resam Melayu
Pahang and another appeal [2015] 4 MLJ 766
Fence Gate Limited v NEL Construction Ltd [2001] APP.L.R. 12/05
Finelvet AG v Vinava Shipping Co Ltd, The Chrysalis [1983] 1 WLR 1469
FR Absalom Ltd v Great Western (London) Garden Village Society Ltd [1933] AC
592 at 598 and 602
Geogas SA v Trammo Gas Ltd, the Baleares [1991] 3 All ER 554
Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] NZCA 131
Goldenlotus Maritime Ltd v European Chartering and Shipping Inc [1994] 1 SLR
383
xiii
Hamidah Fazilah Sdn Bhd v Universiti Tun Hussein Onn Malaysia (UTHM) [2017]
7 MLJ 274
Hoenig v Isaacs [1952] 2 All ER 176
James Clark (Brush Materials) Ltd v Carters (Merchants) Ltd [1944] 1 KB 566
Jeuro Development Sdn Bhd v Teo Teck Huat (M) Sdn Bhd [1998] 6 MLJ 545
Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 6 MLJ 126
Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd [2015] 6 MLJ 126
Kodros Shipping Corporation v Empresa Cubana de Fletes (No 2) [1983] 1 AC 736
Lembaga Kemajuan Ikan Malaysia v WJ Construction Sdn Bhd [2013] 5 MLJ 98
Lim Chiew v. Siteman Construction Sdn Bhd [2013] MLRHU 1
Lim Joo Thong v Koperasi Serbaguna Taiping Barat Berhad [1998] 1 MLJ 657
LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2011] SGHC 163
Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and another case [2015]
11 MLJ 841
Maimumah Deraman v Majlis Perbandaran Kemaman [2010] MLJU 1711
Majlis Amanah Rakyat v Kausar Corporation [2011] 3 AMR 315
Mechanalysis Sdn Bhd (in liquidation) v Appraisal Property Management Sdn
Bhd [2016] 11 MLJ 566
Menara Kuala Lumpur Sdn Bhd v Bungy Malaysia Sdn Bhd [2015] 8 MLJ 370
xiv
MMC Engineering Group Bhd & Anor v Wayss & Freytag (M) Sdn Bhd [2015] 10
MLJ 689
M’Rae v M’Lean [1853] 2 E & B 946
Nirwana Construction Sdn Bhd v Pengarah Jabatan Kerja Raya Negeri Sembilan
Darul Khusus & Anor [2008] 4 MLJ 157
Northern Elevator Manufacturing Sdn Bhd v United Engineers (Singapore) Pte Ltd
[2004] 2 SLR 494
Ong Guan Teck & Ors v Hijjas [1982] 1 MLJ 105
Perembun (M) Sdn Bhd v Binas BMK Sdn Bhd and another case [2015] 11 MLJ 447
Petronas Penapisan (Melaka) Sdn Bhd v Ahmani Sdn Bhd 126 [2016] 2 MLJ 697
Perwira Bintang Holdings Sdn Bhd v Kerajaan Malaysia [2014] 11 MLJ 561
Pioneer Shipping Ltd V BTP Tioxide Ltd [1982] AC 724
Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360
Re Arbitration Between Mohamed & Koshi Mohamed [1963] 29 MLJ 32
Rmarine Engineering (M) Sdn Bhd v Bank Islam Malaysia Bhd [2012] 10 MLJ 453
Sanlaiman Sdn Bhd v Kerajaan Malaysia [2013] 3 MLJ 755
Sanshin Chemicals Industry v Oriental Carbons and Chemicals AIR [2001] SC 1219
Sapiahtoon v Lim Siew Hui [1963]29 MLJ 305
SDA Architects (sued as a firm) v Metro Millennium Sdn Bhd [2014] 2 MLJ 627
xv
Simpson v In land Revenue [1914] 2 K.B. 842
Superintendent of Lands and Surveys Kuching v Jamilah bt Abdul Hamid & Ors
[2013] 10 MLJ 229
The Government of India v Cairn Energy India Pty Ltd & Anor [2011] 6 MLJ 441
The Government of India v Cairn Energy India Pty Ltd & Ors [2014] 9 MLJ 149
Tune Insurance Malaysia Bhd v Messrs K Sila Dass & Partners [2016] 12 MLJ 571
Tridant Engineering (M) Sdn Bhd v Ssangyong Engineering and Construction
Co Ltd [2016] 6 MLJ 166
Welfare Innsurance Co. Ltd v Maidinn bin Manap [1969] 1 MLJ 166, FC
xvi
LIST OF TABLES
TABLE NO. TITLE PAGE
3.1 Comparison between Provision Question of Law
in Malaysia and Singapore 52
3.2 Process and Procedure for Challenging Arbitration
Award on Question of Law 58
4.1 Number of Cases, Name of Cases and Year of Cases
by Use of Each Keyword Search in Malayan Law
Journal Cases 69
4.2 Summary of the Cases 71
4.3 Cases to be Analysed and Compared in Chapter 5 72
6.1 Judicial Interpretation on Question of Law 146
xvii
LIST OF FIGURES
FIGURE NO TITLE PAGE
1.1 Flow Chart of Research Process 11
xviii
LIST OF ABBREVIATIONS
AC Law Reports: Appeal Cases
All ER All England Law Reports
AMR All Malaysia Reports
App Cas Appeal Cases
Build LR Building Law Reports
CLJ Current Law Journal (Malaysia)
Const LR Construction Law Reports
E & B Ellis, Blackburn and Ellis' Queen's Bench Reports
FCR Federal Court Reports
HL House of Lords
KLRCA Regional Centre for Arbitration Kuala Lumpur
KB King Bench
L.J.Ex Law Journal Reports, Exchequer
Lloyd‟s Rep Lloyd‟s List Reports
LR Law Reports
MLJ Malayan Law Journal
NZCA New Zealand Court of Appeal Reports
PC Privy Council
QB Queen Bench
SC Senior Council
SLR Singapore Law Report
SGCA Singapore Court of Appeal (unreported judgments)
SGHC Singapore High Court (unreported judgments).
S.W.2d South Western Reporter, 2nd Series
xix
VR Victorian Reports
WLR Weekly Law Report
UNCITRAL United Nations Commission on International Trade
Law
CHAPTER 1
INTRODUCTION
2
CHAPTER 1
1 INTRODUCTION
INTRODUCTION
1.1 Background of the Study
Both Arbitration Act 1952 and Arbitration Act 2005 do not define arbitration.
Arbitration is one of the popular dispute resolution methods in construction industry
Malaysia. The definition must however be distinguished from other means of
dispute resolution. In Collins v Collins,1 Romilly MR said, ―An arbitration is a
reference to the decision of one or more persons, either with or without an umpire, of
a particular matter in difference or dispute between the parties …‖2
In the case of Ajzner v Cartonlux Pty Ltd,3 it has been held that a process
involving a reference to a person described as an ―arbitrator‖ was not an arbitration
but a reference to a valuer to make a determination in accordance with that person’s
skill and knowledge.
1 28 LJ Ch 184.
2 Supra, fn 1.
3 [1972] VR 919.
3
The definition that stated above is a broad definition which is not very useful.
It is better to list the attributes which collectively identify arbitration, like what Lord
Wheatley did in Arenson v Arenson.4 He listed the following attributes which point
towards arbitration:
―(a) there is a dispute or a difference between the parties which has been
formulated in some way or another; (b) the dispute or difference has been
remitted by the parties to the person [i.e. the arbitrator] to resolve in such
manner that he is called upon to exercise a judicial function; (c) where
appropriate, the parties must have been provided with an opportunity to
present evidence and/or submissions in support of their respective claims in
the dispute; and (d) the parties have agreed to accept his decision‖5
Arbitration has become recognized as the dispute settlement mechanism in
the construction industry. It is seen as the final mode of dispute resolution which is
beyond the usual attractions of arbitration, such as privacy, speed, flexibility and
choice of the arbitrator (Sundra Rajoo, 2005).
Most Malaysian construction disputes are resolved via arbitration.
Arbitration is the norm because firstly, the frequency of appearance of arbitration
clauses in standard forms of contract. An arbitration agreement found in the standard
form of construction contract for example clauses 34 and 54 of the PAM and JKR
forms of contract respectively. Secondly, the technical content of disputes, leading
to the use of arbitrators skilled in technical disciplines. Finally, the need in many
disputes for the arbitrator to be empowered to open up, review and revise decisions
or certificates, arising from the Architect or Engineers judgment in administering the
building contract (Sundra Rajoo, 2005).
4 [1990]787 S.W.2d 845.
5 Supra, fn 4.
4
Malaysia enacted a new Arbitration Act 2005 (Act 646) based on the United
Nations Commission on International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration because of the increasing popularity of
arbitrations as a mode of dispute resolution. It received the Royal Assent on
December 30, 2005 and will be applicable to all arbitration commenced after March
5, 2006, while arbitrations commenced prior to that date will remain governed by the
old Arbitration Act 1952. The new act, besides brings changes to the arbitration
practice, it also provide clarity and certainty in the law as well as finality in the
arbitral process and enforceability of awards (Davidson and Sundra Rajoo, 2006).
In the new Arbitration Act 2005, section 2(1) defines an award collectively to
refer to both awards of an international and domestics arbitration. By section 36(1)
all awards are declared as final and binding. An award can be decided in several
forms such as a final award,6 an interim award
7 or a temporary award (Halsbury’s
Laws of Malaysia, 2002). Generally, an award is of practical importance because an
accurate classification may determine, for example:
i) Whether the decision is enforceable by domestic or foreign court.
ii) Whether the decision is susceptible of appeal or other intervention by a
court, and if so by what means.
iii) Whether the decision is binding on the parties and the arbitral tribunal.
iv) As regard the latter, the categorization of the decision may determine
whether and to what extent the arbitral tribunal can validly recall or vary
its decision (Mustill and Boyd, 2001).
According to Grace Xavier, 2001, an arbitrator’s award is not final and
binding but still can be challenged by any other parties, until it is registered and
accepted as a judgment by leave of the High Court. An arbitrator’s award that did
not comply with the said requirements may be set aside or remitted by the court.
6 Section 17, Arbitration Act 1952; Section 36, Arbitration Act 2005.
7 Section 15, Arbitration Act1952.
5
One of the limited ways in which the High Court can actively participate in
the substance of the domestic arbitration award8 is through a reference on a question
of law under section 42 of the Arbitration Act 2005. Section 42(1) of the Arbitration
Act 2005 provides:
(1) Any party may refer to the High Court any question of law arising out
of an award.
(1A) The High Court shall dismiss a reference made under subsection (1)
unless the question of law substantially affect the rights of one or more
of the parties.
According to section 42(4) of The Arbitration Act 2005, ―the high court may,
on the determination of a reference (a) confirm the award; (b) vary the award; (c)
remit the award in whole or in part, together with the High court’s determination on
the question of law to the arbitral for reconsideration; or (d) set aside the award, in
whole or in part‖.9
In order for a proper invocation of the court's powers under section 42, the
question of law identified or presented must refer to ―a point of law in controversy‖
which requires the opinion, resolution or determination of this court. Such opinion
or determination can only be arrived at ―after opposing views and arguments have
been considered‖. The question will include an error of law that involves an
incorrect interpretation of the applicable law but will not include any question as to
whether the award or any part of the award was supported by any evidence or any
sufficient or substantial evidence; or whether the arbitral tribunal drew the correct
factual inferences from the relevant primary facts.10
8 Parties in a domestic arbitration expressly opt out of Arbitration Act 2005 s42 as in the KLRCA
Arbitration Rules. 9 Section 42(4), Arbitration Act1952.
10 [2015] 10 MLJ 689.
6
Lord Steyn identified question of law must be a real and legitimate question
of law and not a question of fact ―dressed up‖ as a question of law in Geogas SA v
Trammo Gas Ltd, the Baleares.11
The courts must be ―constantly vigilant‖ of the
―catalogue of challenges to arbitrators‖ findings of fact, ensuring that attempts to
circumvent this rule by dressing up questions of fact as questions of law ―are
carefully identified and firmly discouraged‖.
1.2 Problem Statement
The English Act for the first time introduced a qualified system for appeals
on question of law, by providing that such appeals could only be brought by the
consent of the other parties to the reference or with the leave of the court and also
contains statutory guidelines for the court to consider when dealing with leave
applications . In the case of BTP Tioxide Ltd v Pioneer Shipping Ltd,12
the question
of how the court should exercise its discretion in granting leave was discussed, and
led to the famous ―Nema Guidelines‖. In the case of Gold and Resource
Developments (NZ) Ltd v Doug Hood Ltd,13
the New Zealand the Court of Appeal
laid down its own guidelines for the exercise of the discretion to grant leave. These
parallel but are not same as the ―Nema Guidelines‖ which were applied in England
under the Arbitration Act 1979 until the passing of the 1996 Act (Sundra Rajoo and
Davidson, 2007).
It is noted that in New Arbitration Act 2005, section 42, the trend outlined
above to limit the scope of appeals on a point of law has not been followed in
Malaysia. According to Sundra Rajoo, 2005, section 24 of the 1952 Act and section
42 of the 2005 Act is vaguely worded to allow the raising to the High Court of any
question of law ―arising out of an award‖ but does not provide the necessary
11
[1991] 3 All ER 554. 12
[1981] 2 Lloyd‟s Rep 239. 13
[2000] NZCA 131.
7
guidelines to filter out superficial applications designed merely to delay proceedings
and enforcement. There is no requirement to obtain leave, no provision to limit or
define the question of law and no apparent discretion vested in the court to entertain
or not to entertain the reference.
What precisely is a question of law? The term is not defined in Act 646. In
the case of Fence Gate Limited v NEL Construction Ltd,14
TCC, Judge Thornton QC
stated that ―it is never easy to define what is meant by question of law in the context
of an arbitration appeal‖. In many instances, we can only feel safe in characterizing
a question as one of law or fact once a court has laid down a precedent.15
But even
then we must take care: ―what is question of law in a judicial review case may not
necessarily be question of law in the field of consensual arbitrations‖.16
Question of law is defined under New Zealand's Arbitration Act 1996. Sub-
clause 5(10) of Schedule 2 to that the Act defines a ―question of law‖ as follow:
(10) For the purposes of this clause, question of law:-
a) Includes an error of law that involves an incorrect interpretation of
the applicable law (whether or not the error appears on the record
of the decision); but
b) Does not include any question as to whether
i) The award or any part of the award was supported by any
evidence or any sufficient or substantial evidence; and
ii) The arbitral tribunal drew the correct factual inferences from
the relevant primary facts.
The phrase ―question of law‖ is also not defined under the Singapore
Arbitration Act 2001 (Chapter 10), specific legislation in Singapore dealing with
14
[2001] APP.L.R. 12/05. 15
[1983] 1 Ll Rep 605 16
[1993] 1 Ll Rep 215 at 231.
8
domestic arbitrations but case laws have shed some light and it will be helpful to
have a look at them. In the case of Ahong Construction (S) Pte Ltd v United
Boulevard Pte Ltd,17
GP Selvam JC defined a question of law in the following terms:
―A question of law means a point of law in controversy which has to be
resolved after opposing views and arguments have been considered. It is a
matter of substance the determination of which will decide the rights between
the parties. The point of law must substantially affect the rights of one or
more of the parties to the arbitration. If the point of law is settled and not
something novel and it is contended that the arbitrator made an error in the
application of the law there lies no appeal against that error for there is no
question of law which calls for an opinion of the court. An application for
leave to appeal on the ground that the appeal invokes a question of law must
therefore clearly present the question of law on which the court's opinion is
sought and should also show that it concerns a term of the contract or an
event which is not a one-off term or event‖
The Court of Appeal in Northern Elevator Manufacturing Sdn Bhd v United
Engineers (Singapore) Pte Ltd18
adding that ―as a preliminary point, it is essential
to delineate between a ―question of law‖ and an ―error of law‖. The court of appeal
further opined that:
―To our mind, a ―question of law‖ must necessarily be a finding which the
parties dispute, that requires the guidance of the court to resolve. Where an
arbitrator does not apply a principle of law correctly, that failure is a mere
―error of law‖ (but more explicitly, an erroneous application of law) which
does not entitle an aggrieved party to appeal‖
The foregoing discussion highlight that Arbitration Act 2005 section 42 is not
very clear and may cause argument. Therefore it is very difficult for the losing party
17
[2000] 1 SLR 749 18
[2004] 2 SLR 494
9
to decide whether the question arose is question of law and should they challenge the
arbitral award under this ground. Normally it is for the court to decide.
Hence, the issues derived from the statement above are what are the true
meaning, application of this section and what are the judicial interpretations of
―question of law‖? It was common ground between the parties that what would
amount to a ―question of law‖. But how does one determine whether a particular
question raised is a proper and valid question of law or not?
1.3 Research Questions
The above problem statements lead to the following research question:
i) What are the judicial interpretations of ―question of law‖ under Section
42 Arbitration Act 2005?
1.4 Research Objectives
The objectives of this research are as follows:
i) To identify the judicial interpretations of ―question of law‖ under
Section 42 Arbitration Act 2005.
10
1.5 Scope of the Study
The approach adopted in this research is case law based. Only cases related
to question of law will be discussed in the research. This research will focus on the
provision pertaining setting aside and remitting award for the question of law on the
face of the award in Arbitration Act 2005 section 42.
This study is conducted by law cases which obtained from Lexis Nexis and
Malayan Law Journal (MLJ). The study also refers to cases in other country such as
Singapore.
1.6 Significance of Study
The importance of this study is to give an insight of judicial interpretations on
what are the circumstances considered as ―question of law‖ in arbitration. Besides,
this study also clarify the basic grounds and circumstances that available for the
losing party in the arbitration refer to the High court to remit, vary or set aside the
award under Section 42 Arbitration Act 2005 if there is a question of law arise on the
face of the award.
1.7 Research Methodology
Research methodology proposes an arrangement of research procedures. The
processes and methods of approach act as a guideline so that the research can be
done in a systematic way to achieve the objectives of the study. This research is
11
Research Topic
- Identify the Issues
- Research Topic
- Research Questions
- Research Objectives Research Objective
- Significance of the Study
- Scope of the Study
- Research Methodology
- Organisation of Chapters
Phase 1
Literature Review
- Definition of Award
- Challenging of Arbitral Award
- Arbitration Act in Malaysia
- Meaning of Question of Law
- The Distinction between Law and Fact
- Provision of Question of Law in Malaysia
- Provision of Question of Law in Singapore
- Procedure of Challenging Award on Question of Law
Phase 2
Phase 3
Selected Cases
- Chain Cycle Sdn Bhd v Kerajaan Malaysia
- Kerajaan Malaysia v Perwira Bintang Holdings Sdn Bhd
- SDA Architects (sued as a firm) v Metro Millennium Sdn Bhd
- Lembaga Kemajuan Ikan Malaysia v WJ Construction Sdn Bhd
- LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd
- Engineering Construction Pte Ltd v Sanchoon Builders Pte Ltd
Phase 4
Results
Phase 5
- Magna Prima Construction Sdn Bhd v Bina BMK Sdn Bhd and
another case
- MMC Engineering Group Bhd & Anor v Wayss & Freytag
(M) Sdn Bhd
Sources: Court Cases from MLJ,
Building Law Report and other
Law Journals (Lexis Nexis),
Academic Books, Seminar
Papers, Journal and Article
- All conclusion and recommendations were made
based on findings gained.
- Detail study on legal cases.
- Legal cases in relation to question of law in
- Collect cases from Malayan Law Journal
Judical interpretations of ―question of law‖ under Section 42
Arbitration Act 2005.
DATA COLLECTION
- Access to UTM library electronic database
(Lexis Malaysia Legal Database)
To identify the judical interpretations of ―question of law‖ under
Section 42 Arbitration Act 2005.
DEVELOPMENT OF
RESEARCH PROPOSAL
WRITTING UP
DATA ANALYSIS AND INTEPRETATION
DEVELOPMENT OF
THEORITICAL
FRAMEWORK
divided into four main stages: Identify Research Issue, Data Collection, Data
Analysis and Writing
Research methodology was divided into four phases as show in figure below:
Figure 1.1: Flow Chart of Research Process
12
1.7.1 Identify Research Issue
The initial stage is to identify the area of study and research issue. Initial
literature review was done in order to obtain the overview of the particular research
topic. It involved reading on various sources of published materials for example,
articles, journals, seminar papers, related cases, previous research and other related
research materials. Then, the next step is to formulate a suitable objective and
designing a scope of study.
1.7.2 Data Collection
The second stage is to develop research design and data collection. The main
purpose of research design is to determine the important data to be collected and the
method to collect it. The data will be collected through documentary study on the
Court cases form MLJ, Building Law Report and other law journals form Lexis
Nexis. Next, data also will collected through published resources, like books,
journals, articles, varies standard form of contract and related statutory are the most
helpful sources in collecting primary and secondary data. Data collection stage is an
important stage where it leads the researcher towards achieving the main objectives.
1.7.3 Data Analysis
During this stage, the case laws collected and all the relevant information will
be specifically arranged and analyze and also interpreted based on the literature view
is converted into information that is useful for the research. Researcher will
13
carefully review the relevant case laws collected and also with special attention on
the facts of the case, issues and judgments presented by each case law.
1.7.4 Writing
In the last stage, process of writing up and checking will involves to complete
the report. A conclusion will be made up and at the same time recommendations that
related to the problem may be made in this stage. The author had also reviewed the
whole process of the research to identify whether the research objective has been
achieved.
1.8 Organisation of Chapters
This report is prepares according to the procedure of postgraduate project. It
is contain six (6) chapters as outlined for the projects.
Chapter one (1) gives an overview of the research which has been carried out.
It consists of an introduction to the study that describes the arbitration, question of
law and issue pertaining to question of law in Arbitration Malaysia. The issue of the
study also indicated that the pertinent questions. This chapter also described the
scope of the study and the overall structure of study. The research methodology is to
give a true framework for achieving the objectives of the study.
14
Chapter two (2) discusses the theory related to the arbitration award. It
includes definition and purpose of award and type of award. This chapter also
discusses the challenging of arbitral award which consist of meaning and purpose of
challenge and method of challenging an award. Detailed related information would
be explained and described in the sub-topics.
Chapter three (3) basically is the literature review on the theoretically study
of the availability recourse for the losing party to challenge the arbitral award under
the question of law to the court. This chapter will discuss the circumstances and
grounds that considered as a question of law enable to confirm the award, vary the
award, remit the award in whole or in part or set aside the award in whole or in part
(based on books, journals, articles, seminar paper and internet websites). This
chapter also discusses the differences between the provision of question of law in
Malaysia and Singapore.
Chapter four (4) is a discussion of the research methodology of the study. It
consists of approached to legal research, research scope and phases of research
methodology.
Chapter five (5) is concentrate on the court cases review and analysis in order
to discuss the judicial interpretation on the ground and circumstances that considered
as question of law in arbitration.
Chapter six (6) is the final part of the whole report it concluded the finding
for the whole research. This chapter will include the summary on the research
findings and conclusion. In addition, the proposals of further studies are also
described in this chapter.
154
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