JAN DE NUL (M) SDN BHD & ANOR v VINCENT TAN CHEE YIOUN & ANOR
Court of Appeal (Putrajaya)
Civil Appeal No. W-02(C)(A)-1400-08/2016
[Judgment date: 24 October 2017]Coram:
Hamid Sultan bin Abu Backer, JCA; Umi Kalthum binti Abdul Majid, JCA; Hasnah binti Dato’ Mohamed Hashim, JCA
Arbitration – Construction dispute – land reclamation – Arbitration Act 2005(AA 2005) – Section 37 AA 2005 – setting aside – Section 36 AA 2005 – Section 42 AA 2005 – English Arbitration Act 1996(EAA 1996) – difference between AA 2005 and EAA 1996 – intervention on arbitral awards – integrity of arbitral process – arbitration award is final and binding – appeal
Brief Facts
The factual matrix of the case revolve around a land reclamation project situated in Johor Bahru. Central Malaysian Properties Sdn Bhd (CMP) as the developer of the project and a company controlled by Vincent Tan Chee Yioun (VT), had appointed Jan De Nul (JDL), a specialist in land reclamation whose ultimate holding company, Jan De Nu Group that is based in Luxemborg, as contractors. The contract, inter alia stated that JDL is to ensure that they deliver a reclaimed platform from the sea coast. JDL however was not able to deliver in full what was required under the contract but initiated arbitration proceedings for payment of work done. VT together with CMP as owners of the project subsequently filed a counterclaim where after the arbitral tribunal made the award in favor of VT and CMP and held that JDN was responsible and in breach of contract for a Reclamation Failure Incident and was ordered to pay CMP the amount of RM 2,789,383.57. JDN then filed an application to set aside the award pursuant to Section 37 of the Arbitration Act 2005.
JDN argues that the contract between JDN and CMP is a conventional contract where JDN builds to CMP’s design, therefore with regards to the land reclamation, the need for ground improvement, via staged construction is an issue of design, therefore any issue in relation to design should be specified and communicated by CMP. JDN also asserted that the arbitration tribunal had made a determination based on facts that fell outside the scope of the submission to arbitration. On the other hand, CMP’s case is that the ground improvement works constitutes a method of construction which is left to be determine by JDN and the Reclamation Failure Incident was caused by JDN purportedly not following its method statement and work programme. The argument put forward by CMP was based on the simple fact that JDN had breached its contractual obligations.
The High Court decided not to set aside the award and held that the arbitral tribunal had not committed any error on the matters put into issue by JDN. JDN subsequently appealed to the Court of Appeal.
Issue
The issues that confronted the court of appeal inter alia were ultimately based on the provisions of the Arbitration Act 2005, in particular Sections 37 and 42 which provides the basis for an application to set aside an arbitration award as well as a means for an aggrieved party to refer a question of law arising out of an arbitration award which substantially affects the rights of one or more of the parties. The question at hand was whether or not the issues in contention fell within the scope of Section 37 and 42. The relevant sections as well as reference to the English Arbitration Act 1996 were referred to by JDN in their submissions to set aside the arbitration award.
Held
In delivering the grounds of judgment, Hamid Sultan bin Abu Backer JCA held that Section 37 of the Arbitration Act 2005 (AA 2005) was not of the same matter to any of the sections in the English Arbitration Act 1996 (EAA 1996) in relation to setting aside a domestic award. The significant difference is that Section 37 of the AA 2005 does not give a positive right to a party to challenge the award and vests the discretion to the courts, while the provisions in the EAA 1996, in particular Sections 67 and 68 allows the court to intervene on an arbitral award and provides a substantive right to a party to challenge an award. The learned court judge also established that the provisions in Section 42 of the AA 2005 is to be extremely restrictive in intervention as the court’s role is to ensure substantive integrity of the arbitral process is maintained at all stages. Only violent breaches on the face of record which compromises the integrity of the decision making process should be the cause of concern for the courts. The learned court judge also made reference to Section 36 of the AA 2005 which states that an arbitration award is final and binding, as well as the case of Taman Bandar Baru Masai Sdn Bhd v Dindings Corporations Si Bhd [2010] 5 CLJ 83 to establish that the AA 2005 makes it compulsory for the courts to respect the decision of the arbitrators and only minimum intervention is allowed. The appeal was dismissed.
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