- Key legislation applicable to arbitration in Malaysia
The Arbitration Act 2005, as amended by the Arbitration (Amendment) Act 2011 (AA) governs arbitration proceedings in Malaysia. The Act draws a clear distinction between domestic and international arbitration, whereas:
- Parts I, II and IV of the AA apply when the seat of arbitration is in Malaysia. Part III applies unless the parties agree otherwise.
- Parts I, II and IV of the AA apply to international arbitration. Part III does not apply unless the parties agree otherwise in writing.
- Renowned Arbitration Institutes
These are some common arbitration institutes to resolve both domestic and international disputes:
- Asian International Arbitration Centre (AIAC), formerly known as the Kuala Lumpur Regional Arbitration Centre (KLRCA)
- Chartered Institute of Arbitrators (CIArb)
- Malaysian Institute of Arbitrators (MIArb)
Malaysians are not restricted in their choice in choosing AIAC as the arbitration seat, everyone is free to choose any arbitration institutions in the world, taking into account the business relationship and nature of the dispute in question. Examples of international arbitration organisations include:
- Singapore International Arbitration Centre (SIAC)
- ICC International Chamber of Commercial Arbitration (ICC)
- London Court of International Arbitration (LCIA)
- Fundamental rights of the parties
Parts I, II and IV of the AA allow the parties’ freedom of choice in:
- determining the number of arbitrators (section 12(1));
- agreeing on a procedure for appointing the arbitrator (section 13(2));
- agreeing on the procedure to be used by the arbitral tribunal in conducting the proceedings. (section 21(1)).
If the parties commence a litigation despite a valid arbitration clause or agreement, a court must stay proceedings refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
- Can all disputes be resolved by arbitration?
Any dispute on which parties have agreed to arbitrate under an arbitration agreement can be determined by arbitration unless it is contrary to public policy.
There is no requirement that the dispute must arise out of a commercial relationship. For example, tortious disputes are equally arbitrable. Only the following disputes cannot be referred to arbitration:
- A criminal matter.
- Prosecution.
- A public policy/public interest matter.
- A family law matter.
- Insolvency law matter
- Limitation period for arbitration
The limitation period for arbitration is usually determined by statute or contractual agreement between the parties. The parties may include a specific clause requiring a dispute to be referred to arbitration within a specified period.
If the arbitration clause/agreement is silence on the limitation
period, an action founded on contract or tort must be brought within six years
from the date on which the cause of action accrued.
