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2021 MarsdenLR 1841
HIGH COURT MALAYA SHAH ALAM
LOW KOH HWA – Appellant
Versus
PERSATUAN KANAK-KANAK SPASTIK SELANGOR DAN WILAYAH PERSEKUTUAN & ANOTHER CASE – Respondent
[Originating Summons Nos: BA-24C(ARB)-4-05-2020 & BA-24C-87-09-2020]
An arbitrator must comply with disclosure obligations to maintain impartiality; failure to do so breaches natural justice and may lead to the setting aside of the award as beyond the terms of submission.
Headnote:(A) Arbitration Act 2005 – Sections 37 and 38 – Award set aside due to breach of natural justice and arbitrator's non-disclosure of relationships creating justifiable doubts regarding impartiality – Award found to exceed terms of arbitration agreement under sections 37(1)(a)(iv) and (v). (Paras 10, 50, 54)
(B) Arbitrator's duty includes full and timely disclosure of relationships that may affect impartiality – Failure to comply results in breach of the first rule and requirement of independence. (Paras 28, 44)
(C) Award on overpayment considered unenforceable as it is beyond the scope of rules of arbitration without agreement of parties. (Paras 51, 54)
Facts of the case: The dispute arose from the non-payment of professional fees following arbitration between an architect and a association. The arbitrator's decision included claims not recognized in the initial terms and the architect's challenge focused on the lack of impartiality due to a relationship with a key witness.
Findings of Court: The court established that the award violated established rules governing arbitrator conduct, leading to a determination that the award was invalid.
Issues: Whether the arbitrator's award exceeded the intended scope of arbitration, whether proper disclosure was made, and if the award should thus be enforceable.
Ratio Decidendi: The court ruled that the arbitrator's failure to disclose pertinent relationships violated the requisite standards for impartiality and independence, mandating the set aside of the award.
Result: Setting aside OS is allowed, enforcement OS dismissed.
JUDGMENT
Background
[1] This case concerns:
(i) Mr Low Koh Hwa @ Low Kok Hwa (Mr Low), a registered architect who practises as a sole proprietor under the name of Messrs "Low & Associates"; and
(ii) "Persatuan Kanak-kanak Spastik Selangor dan Wilayah Persekutuan" (association).
[2] The association appointed Mr Low to provide architectural consultancy services (services) for the redevelopment of the association's "Spastic Centre" in Petaling Jaya, Selangor Darul Ehsan (project).
[3] Mr Low claimed that he had completed the services but the balance of his professional fees in a sum of RM485,269.33 had yet to be paid by the association (Mr Low's claim).
[4] Mr Low's claim was referred to arbitration before a sole arbitrator, Ar Akbal Singh Sandhu (arbitrator).
[5] In the arbitral proceedings before the arbitrator (arbitration):
(i) on the first day of the arbitration, 28 August 2018:
(a) Mr Low was not legally represented;
(b) the association was represented by its honorary director [Datuk Dr Mohinder Singh (Datuk Mohinder)] and counsel, Mr Ankit Sanghvi;
(c) Mr Low was cross-examined by Mr Ankit in the presence of Datuk Mohinder (the arbitrator allowed Datuk Mohinder to be present at the arbitration while Mr Low gave evidence);
(d) after Mr Low's cross-examination and before the commencement of Datuk Mohinder's examination-in-chief by Mr Ankit, the "notes of evidence" of the arbitration (NOE) stated as follows (verbatim):
Arbitrator: Datuk [Mohinder], you can take your seat. Low, like I told you, I know Datuk [Mohinder]; I know Datuk [Mohinder], but it is not Spastik. So, it is inevitable that in this field, we know counsels (sic), we know about each other...
[Emphasis added]; and
(e) Mr Low begun cross-examination of Datuk Mohinder; and
(ii) on the second day of the arbitration, 30 August 2019:
(a) Mr Low was represented by learned counsel, Mr Steven Wong Chin Fung; and
(b) Datuk Mohinder was cross-examined and re-examined by Mr Wong and Mr Ankit respectively.
[6] On 12 February 2020, the arbitrator delivered a final award (award) as follows, among others:
(i) Mr Low was only entitled to claim from the association a sum of RM747,250 as his professional fees for the services;
(ii) Mr Low was estopped from claiming from the association for any professional fees in excess of RM747,250;
(iii) the association had overpaid a sum of RM72,750 to Mr Low (overpayment). Hence, Mr Low shall refund the overpayment to the association;
(iv) Mr Low shall pay to the association interest at the rate of 5% per annum on the overpayment from the date of the award until full refund of the overpayment (interest (overpayment)); and
(v) arbitration costs in an amount of RM36,598 (costs sum) shall be paid by Mr Low to the association with interest at the rate of 5% per annum on the costs sum from the date of the award until full settlement of the costs sum.
Two Originating Summonses (OS)
[7] The following two OS have been filed in this court:
(i) Mr Low has filed OS no BA-24C(ARB)-4-05-2020 under s 37 of the Arbitration Act 2005 (AA) against the association to, among others, set aside the award (setting aside OS); and
(ii) OS no BA-24C-87-09-2020 has been filed by the association against Mr Low for a court order under s 38(1) AA to recognise the award as binding and enforceable as a judgment in terms of the award (enforcement OS).
[8] I will deal with the two OS as follows:
(i) the court will first decide the setting aside OS. If the setting aside OS is allowed, the enforcement OS has to be dismissed; and
(ii) if I dismiss the setting aside OS, I will then determine the enforcement OS.
Issues
[9] These two OS raise the following questions:
(i) whether the award had dealt with a dispute not contemplated by or not falling within the terms of the submission to the arbitration (terms (submission to arbitration)) as understood in s 37(1)(a)(iv) AA;
(ii) did the award contain decisions on matters beyond the scope of the terms (submission to arbitration) (within the meaning of
