In PT Wijaya Karya (Persero) TBK & Anor v Zecon Bhd & Anor [2025] MLJU 1472, the Court of Appeal reversed the High Court’s decision to set aside an arbitral award on the ground that there was no valid arbitration agreement between the four parties to the dispute.
 

Brief facts
 

 
Zecon Berhad, a Malaysian company (“1^st Respondent”), engaged PT Wijaya Karya (Persero) TBK, an Indonesian company (“1^st Appellant”) for project management and manpower services for the development of a Retail Mall in Kuching under a Project Management Services Agreement ("PMSA-1").
 
Subsequently, their respective local subsidiaries, namely Zecon Construction (Sarawak) Sdn Bhd (“2^nd Respondent”) and Wijaya Karya Perseron Sdn Bhd (“2^nd Appellant”), entered into a second agreement ("PMSA-2").
 
Both agreements, PMSA-1 and PMSA-2, contained identical dispute resolution clauses which inter alia oblige the parties to refer disputes to arbitration governed by the KLRCA (Kuala Lumpur Regional Centre for Arbitration) Rules (now the Asian International Arbitration Centre Rules).
 

 
The 1^st Appellant and 2^nd Appellant (collectively, “Appellants”) commenced arbitration against the 1^st Respondent and 2^nd Respondent (collectively, “Respondents”) in 2018. A sole arbitrator was appointed without any challenge by the parties.
 
The disputes between the Appellants and Respondents arose from: 

The Appellants claimed for inter alia the outstanding sum of RM6,731,753.61 (exclusive of GST), interest, general damages and costs. The Respondents counterclaimed for inter alia declaratory relief, the sum of RM6,122,041.37, interest and costs.
 
The arbitrator eventually awarded the Appellants RM4.6 million and dismissed the Respondents’ counterclaims. The arbitrator, inter alia, found as follows: 

 
The Respondents subsequently applied to set aside the award on inter alia the following grounds: 

The High Court allowed the setting aside application on three main grounds: 

 
On appeal, the Court of Appeal reversed the High Court’s decision and reinstated the award. The key issues and reasoning of the Court of Appeal are set out below.
 

 
At the outset of the arbitration proceedings, the Respondents raised a jurisdictional challenge (“Jurisdictional Challenge”) arguing that PMSA-1 and PMSA-2 gave rise to two separate arbitrations - an international arbitration under PMSA-1 between the 1^st Appellant and 1^st Respondent, and a domestic arbitration under PMSA-2 between their respective subsidiaries. The Respondents further argued that the 1^st Appellant and 1^st Respondent should be excluded from the arbitration, as PMSA-2 allegedly superseded PMSA-1.
 
The parties subsequently agreed that the Jurisdictional Challenge would be determined together with the merits of the dispute. In light of this agreement, the Court of Appeal found that the parties had consented to the arbitral tribunal determining the Jurisdictional Challenge together with the merits of the dispute. Therefore, the arbitral tribunal rightfully exercised its powers within the ambit of the doctrine of kompetenz-kompetenz under section 18(7) of the AA 2005, which permits the arbitral tribunal to rule on its own jurisdiction.
 
The Court was also of the view that the Respondent’s Jurisdictional Challenge was closely connected with the merits of the dispute and that it is impossible to determine one without the other.
 
On the Jurisdictional Challenge itself, the Court of Appeal agreed with the arbitrator’s findings that PMSA-2 was a supplementary or collateral agreement to PMSA-1. This is because the parties to PMSA-1 have not agreed to any new contract, nor to rescind or alter the PMSA-1. On the evidence, PMSA-1 continues to exist. Furthermore, the parties to PMSA-2 did not have capacity to rescind, alter or novate PMSA-1; hence, PMSA-1 and PMSA-2 subsist, each being a complete agreement for the same rights and obligations, for the same scope of works.
 
Additionally, the Court of Appeal agreed with the arbitrator’s finding that an implicit agency has been established as the subsidiaries, namely 2^nd Appellant and 2^nd Respondent, were acting as agents for their respective holding companies namely, the 1^st Appellant and 1^st Respondent. As such, the 1^st Appellant and 1^st Respondent are liable to each other under PMSA-1 and for their respective agents, the 2^nd Appellant and 2^nd Respondent under PMSA-2.
 
Crucially, the arbitrator determined that the 1^st Appellant and 1^st Respondent remain the proper and right parties to the arbitration, while the 2^nd Appellant and 2^nd Respondent were joined in their capacity as nominees or agents of their respective principals. This is supported by the wordings of PSMA-2, which reflected the parties’ intention for PMSA-2 to replace PMSA-1 and the parties thereto.
 
The Court of Appeal also discussed the “Group of Companies” doctrine where an arbitration agreement directly entered by certain companies might bind other entities who are non-signatories where their conduct shows an intention to be bound. Such conduct may include participating in negotiations, performance or termination of the agreement or making statements indicating an intention to be bound by the contract.
 
The Court of Appeal cited Dow Chemical France and Ors vs Isover Saint Gobain, ICC Award No. 4131, YBCA 1984, where the “Group of Companies” doctrine was first raised. The Court also referred to the Malaysian case of Padda Gurtaj Singh & Ors v Axiata Group Berhad & Ors [2022] 8 CLJ 671 (“Padda Gurtaj”) where the doctrine was discussed per obiter dicta by our High Court.
 
In Padda Gurtaj, the High Court referred to the Indian Supreme Court case of Mahanagar Telephone Nigam Ltd v Canara Bank & Ors 2019 SCC Online SC 995 and noted that the “Group of Companies” doctrine may be invoked in certain circumstances to bind a non-signatory to an agreement or to an arbitration, such as where there is a direct relationship with a signatory to the arbitration agreement, direct commonality of the subject matter, or the “composite nature” of the transaction between the parties, i.e. a transaction which is inter-linked to the agreement or where the performance of the supplementary agreements is needed for achieving a common objective and collectively bearing on the dispute.
 
It was also noted in Padda Gurtaj that the doctrine has been invoked in cases where there is a tight group structure so as to constitute a single economic unit. This will apply in particular when the funds of one company are used to support or re-structure other members of the group.
 
After considering the arbitrator’s findings, the Court of Appeal found that the High Court wrongly set aside the award on the ground that there was no single arbitration agreement made between all four parties. The Court of Appeal held that PMSA-2 was a supplementary or collateral agreement existing alongside PMSA-1. Additionally, the 1^st Appellant and 1^st Respondent had, through their conduct, assigned their contractual obligations under PMSA-1 to their respective nominees, namely the 2^nd Appellant and 2^nd Respondent, for the purpose of facilitating contract administration.
 

 
The Court of Appeal rejected the High Court’s reliance on the decision in Siemens Industry Software GmbH & Co KG v Jacob and Toralf Consulting Sdn Bhd [2020] 5 CLJ 143 (“Siemens Industry”) to find that the dispositive portion of the award was uncertain. The Court clarified that, unlike in Siemens Industry, there was no confusion at all in the dispositive portion of the award. The dispositive portion here clearly identified the 1^st Respondent, as principal to the 2^nd Respondent, as being liable to the 1^st Appellant, as principal to the 2^nd Appellant.
 
Moreover, the Court of Appeal added that the award must be read in totality in determining the Respondents’ application to set aside the award made pursuant to section 37 of the AA 2005, not section 38. In any event, the Court found that the award had already been registered for enforcement proceedings by relying solely on the dispositive portion, demonstrating its sufficiency and clarity. Accordingly, the allegation of uncertainty was a non-issue and the High Court’s reliance on Siemens Industry was misplaced.
 
It was emphasised that findings of fact and law by an arbitral tribunal are not subject to appellate review, and courts must be slow to intervene. The Court of Appeal followed Hindustan Oil Exploration Co Ltd v Hardy Exploration & Production (India) Inc [2023] 5 CLJ 677 in which another panel of the Court of Appeal held that section 37 of the AA 2005 (based on Article 34 of the Model Law) does not permit reviewing the merits of an arbitral decision.
 
The Court of Appeal further emphasised that the tribunal’s authority derives solely from the parties’ agreement, which in this case validly empowered it to decide their disputes. The Court added that affirming the award was consistent with the AA 2005’s objective of recognising and enforcing arbitral awards and reflected a modern, flexible approach to consent by giving due weight to implied consent in complex commercial scenarios.
 

 
The High Court found that there was a breach of the rules of natural justice because the Respondents were denied a reasonable opportunity to address the agency argument. This is because the Respondents contended that the agency argument only emerged through the arbitral tribunal’s queries after the close of written submissions. The Respondents contended that they were not given a fair and reasonable opportunity to defend or argue on the application of the agency arguments proffered by the Appellants.
 
However, upon scrutinising the cause papers and the proceedings in the arbitral tribunal, the Court of Appeal found that: 

The Court of Appeal was guided by the Federal Court case of Master Mulia Sdn Bhd v Sigur Ros Sdn Bhd [2020] 6 MLRA 51 which held that where a breach of natural justice is alleged, the breach must be significant or serious enough to have an impact on the outcome of the arbitration to justify the setting aside of the award.
 

 
This Court of Appeal decision reinforces the policy of minimal judicial intervention in arbitral proceedings and upholds the finality of arbitral awards. It affirms the kompetenz-kompetenz doctrine and emphasises the high threshold required for setting aside awards on grounds of breach of natural justice. By holding that the 2^nd Appellant and 2^nd Respondent acted as agents of the 1^st Appellant and 1^st Respondent respectively in entering into PMSA-2 and holding the 1^st Respondent liable for the actions of the 2^nd Respondent under PMSA-2, the Court of Appeal appears to have recognised the “Group of Companies” doctrine.
 
This decision also reflects the Malaysian courts’ pro-arbitration stance, especially in the context of complex corporate structures. The Court will scrutinise the agreements, the parties’ intentions, and the surrounding circumstances to determine whether the arbitration agreement meets the requirements of section 9 of the AA 2005, including situations involving implied consent to a unified arbitration process between companies and its subsidiaries.
 
 
Case Note by Loshini Ramarmuty (Partner) and Katelyn Yeoh (Associate) of the Construction and Engineering Practice of Skrine.