On 18 July 2023, the Kuala Lumpur High Court upheld what is considered to be one of the first ever arbitration awards in Malaysia issued by way of the new summary determination procedure under Rule 19 of the Asian International Arbitration Centre (Malaysia) Arbitration Rules 2021 (“AIAC Rules 2021”).
 
Summary Determination Procedure
 
The summary determination procedure, which similar to the summary judgment procedure in courts, is a new feature in the AIAC Rules 2021 which was introduced to bring the Asian International Arbitration Centre (Malaysia) (“AIAC”) in line with the practices of leading arbitration institutions such as the London Court of International Arbitration, the Australian Centre for International Arbitration, the Hong Kong International Arbitration Centre and the Singapore International Arbitration Centre.
 
The requisite threshold test to obtain an award for summary determination is that the applicant must prove that its opponent’s case or defence is manifestly without merit and/or that it manifestly falls outside the arbitral tribunal’s jurisdiction.
 
Background Facts
 
The defendant was the main contractor for a prominent building project in Kuala Lumpur and the plaintiff was a sub-contractor for the same project. In December 2020, the plaintiff initiated an arbitration against the defendant and, subsequently, both parties agreed that the arbitration would be governed by the AIAC Rules 2021.
 
Thereafter, the defendant submitted a request for summary determination pursuant to Rule 19.1 of the AIAC Rules 2021 to dismiss one of the plaintiff’s claims on the basis that it was manifestly without merit and, alternatively, manifestly fell outside the arbitral tribunal’s jurisdiction. Both grounds were premised on the plaintiff’s failure to comply with certain provisions under the PAM Sub-Contract 2006. The claim which the defendant sought to dismiss related to the plaintiff’s final account submission, which amounted to the majority of the plaintiff’s total claim.
 
In October 2022, the arbitrator found in favour of the defendant on both grounds and issued a summary determination award which dismissed the entirety of the plaintiff’s final account claim (“Summary Determination Award”).
 
The plaintiff subsequently filed an application at the High Court pursuant to Section 37 of the Arbitration Act 2005 (“the Act”) to set aside the Summary Determination Award.
 
In opposing the setting aside application, the defendant submitted that the plaintiff’s application amounted to a challenge on the merits based on a question of law, which was no longer permitted given the recent repeal of Section 42 of the Act¹. The defendant further submitted that the summary determination procedure ought to be upheld because it fits within the developing framework of arbitration in Malaysia to increase party autonomy and promote efficiency in the arbitration process by reducing the time and costs of proceedings.
 
The defendant also raised a preliminary objection against the setting aside application on the basis that, although the plaintiff’s originating summons had been filed within 90 days from the issuance of the Summary Determination Award as required under Section 37(4) of the Act, the plaintiff’s affidavit in support was filed one week later and after the expiry of the statutory time limit, without any extension being granted by the Court. In support of its position that there had been an error in procedure, the defendant relied on Order 69 Rule 4(2) of the Rules of Court 2012 which states that an affidavit is to be filed together with an originating summons when commencing an arbitration claim.
 
High Court Decision
 
The High Court agreed with the defendant’s submissions on all counts.
 
In delivering her oral grounds, Yang Arif Dato' Hajah Aliza Binti Sulaiman held that the defendant’s preliminary objection alone was sufficient to dismiss the plaintiff’s setting aside application. The Learned Judge went on to state that, in any event, the plaintiff’s application had indeed amounted to a challenge on the merits of the Summary Determination Award which did not fall within the limited grounds to set aside under Section 37 of the Act and was therefore not permitted.
 
Accordingly, the plaintiff’s setting aside application was dismissed.
 
Comments
 
The High Court’s decision has confirmed that the well-established non-interventionist principles for setting aside applications will equally be applied for challenges against summary determination awards made under the AIAC Rules 2021. In this regard, parties which believe that they can meet the high threshold requirements to obtain a summary determination award ought to consider this avenue as a method to save both time and costs. Parties are reminded that, pursuant to Rule 19.2 of the AIAC Rules 2021, a request for summary determination ought to be submitted no later than 30 days after the filing of the statement of defence.
 
Further, practitioners should also take note of the importance of filing supporting affidavits along with the originating summons when bringing any arbitration claim to the High Court,  including a setting aside application under Section 37 of the Act.
 
The defendant was represented by our Partners, Shannon Rajan and Tatvaruban Subramaniam, and our Senior Associate, Eric Gabriel Gomez.
 
 

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