The court ruled that a party is estopped from commencing fresh arbitration after a prior award is set aside if it elected to appeal the decision, and claims may be time-barred under applicable limitation laws.

JUDGMENT

Atan Mustaffa Yussof Ahmad J:

[1] This judgment concerns an application by the plaintiff seeking declaratory and injunctive reliefs to prevent the defendant from commencing a new arbitration under a certain agreement between them. The central issue is whether the defendant should be allowed to start fresh arbitration proceedings after a previous arbitration between the parties was set aside by the courts on jurisdictional grounds, without deciding the substantive merits of the dispute.

[2] The plaintiff argues that the court's decision affirming the setting aside of the prior arbitral award has brought finality to the entire dispute, thereby barring the defendant from initiating a new arbitration. The defendant, on the other hand, contends that it is not precluded from commencing fresh arbitration under the agreement, as the courts had only invalidated the previous arbitration award due to jurisdictional defects, without adjudicating the actual merits of the parties' underlying substantive claims and dispute.

[3] The case arises in the context of a development project governed by the agreement between the parties. While the underlying facts pertain to that specific project, the legal issues center around the effect of a court setting aside an arbitral award without deciding the merits - whether that forecloses all future arbitration between the parties on the same subject matter.

Background Facts

[4] The Defendant, a Thai company, and the Plaintiff, the Government of the Lao People's Democratic Republic entered into the following agreements:

a) Agreement of Lignite Survey and Mining in the Hongsa District, Udomchai Sub-district of Laos dated 29 May 1992 ("1st Mining Contract"), granting the Defendant a concession to carry out lignite mining work in the Hongsa District of Laos for 15 years, renewable for 5 years each with mutual consent.

b) Additional Agreement dated 21 July 1993 ("2nd Mining Contract) amending the 1st Mining Contract to extend the concession area from 20 square kilometers to 60 square kilometers. Together, the 1st and 2nd Mining Contracts are referred to as the "Mining Contracts".

c) Project Development Agreement dated 22 July 1994 ("PDA"), granting the Defendant the exclusive mandate and rights for the construction of a power plant in the Hongsa District to generate electricity supply to Thailand through the Electricity Generating Authority of Thailand.

d) Hongsa-Lignite (Laos) Co Ltd ("HLL") was established by the Defendant and licensed by the Plaintiff to undertake the Lignite Survey and Mining Project under the Mining Contracts. Thai-Lao Power Co Ltd ("TLP") was to be formed by the Defendant to implement the project under the PDA ("Hongsa Project").

[5] The PDA contained an arbitration agreement providing for arbitration in Malaysia at the Kuala Lumpur Regional Centre for Arbitration under the UNCITRAL Arbitration Rules 1976. The governing law of the PDA was a mixture of Laotian law and New York law.

[6] On 4 September 2006, the Plaintiff issued a Notice of Default to the Defendant citing its failure to comply with obligations under the PDA and giving 30 days to remedy. On 5 October 2006, the Plaintiff terminated the PDA. On 11 October 2006, the Plaintiff terminated the Mining Contracts.

[7] On 26 June 2007, the Defendant and HLL commenced an ad-hoc arbitration against the Plaintiff under the PDA and UNCITRAL Rules ("2007 Arbitration"), claiming the Plaintiff breached the PDA by improperly terminating it without cause and following prescribed procedures. The arbitral tribunal delivered an Award on 4 November 2009 ("Award") finding the Plaintiff had wrongfully terminated the PDA and awarding the Defendant and HLL damages exceeding USD56 million.

[8] On 5 October 2010, the Plaintiff applied to the High court in Malaysia, the seat of arbitration, to set aside the Award under the Arbitration Act 2005 . On 27 December 2012, the High court set aside the Award, finding the arbitral tribunal had exceeded jurisdiction