Skrine has recently obtained what is considered to be one of the first ever arbitration awards in Malaysia by way of the new summary determination procedure under Rule 19 of the AIAC Rules 2021.
 
Summary Determination Procedure
 
The summary determination procedure, which is similar to the summary judgment procedure in courts, is a new feature in the AIAC Rules 2021 which was introduced to bring the 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 applying party must prove that its opponent’s case or defence is manifestly without merit (“First Ground”) and/or that it manifestly falls outside the arbitral tribunal’s jurisdiction (“Second Ground”).
 
Background Facts
 
Skrine represented the respondent in an AIAC arbitration who was the main contractor for a prominent building project in Kuala Lumpur (“the Main Contractor”). The claimant sub-contractor (“the Sub-Contractor”) had initiated an arbitration for a considerable sum, with the majority of this sum comprising claims relating to the Sub-Contractor’s Final Account submissions.
 
Skrine argued that Clause 26.7 of the PAM Sub-Contract 2006, which governs the Final Account procedure, contains elements akin to a multi-tiered dispute resolution clause and the mechanism therein is a condition precedent to a party bringing any claim based on the Final Account to arbitration. In this case, the Sub-Contractor had failed to comply with this condition precedent by submitting its Final Account claims to arbitration before a determination from the Architect, which is the 1st tier dispute resolution mechanism under Clause 26.7. Skrine argued that the Sub-Contractor had prematurely referred the Final Account claims to arbitration when, in fact, there was no dispute to refer to arbitration until there was a determination by the Architect on the Final Account submissions by the Sub-Contractor. In such a scenario, the arbitrator had no jurisdiction to determine the issue, which satisfied the Second Ground for summary determination.
 
Another notable point is that Skrine further argued that, since the reference to arbitration was premature and invalid, the Sub-Contractor had therefore failed to effectively dispute the Final Account within the contractual mechanism provided under Clause 26.7. As a result, the Final Account was deemed agreed and binding on the parties and the Sub-Contractor was now precluded from challenging the same, thereby satisfying the First Ground for summary determination.       
 
Summary Determination Award
 
The arbitrator agreed with Skrine’s arguments on both grounds and granted an award for summary determination in favour of the Main Contractor which dismissed the entirety of the Sub-Contractor’s Final Account claims.
 
This summary determination award operates as a final award and can only be set aside on the limited grounds under section 37 of the Arbitration Act 2005.
 
The Main Contractor was represented by our Partner Shannon Rajan, and Senior Associates Tatvaruban Subramaniam and Eric Gabriel Gomez.