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2025 MarsdenLR 6107
COURT OF APPEAL PUTRAJAYA
KASUGI PRIMA SDN BHD – Appellant
Versus
COBRAIN HOLDINGS SDN BHD & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-02(C)(A)-1146-07/2023 & W-02(C)(A)-1147-07/2023]
The court affirmed that an arbitrator's authority under the Arbitration Act extends beyond procedural matters, allowing them to draw on their expertise without breaching natural justice.
Headnote:(A) Arbitration Act 2005 - Sections 21(2) and 21(3)(b) - Appeals against High Court's dismissal of Originating Summon to set aside Arbitration Award - Appellant claimed procedural impropriety and breach of natural justice - Court found no merit in claims, affirming arbitrator's authority to draw on expertise and available evidence. (Paras 1-63)
(B) Natural Justice - Arbitrator's duty to provide opportunity to respond - Court held that no breach occurred as arbitrator relied on evidence presented by parties, not extraneous evidence. (Paras 43-62)
Facts of the case:
The Appellant, a Main Contractor, contested an Arbitration Award favoring the Respondent, a sub-contractor, regarding delays and payments under a construction contract. The Appellant alleged procedural impropriety and breach of natural justice in the arbitration process.
Findings of Court:
The Court upheld the High Court's decision, confirming the arbitrator's authority and the absence of procedural impropriety or breach of natural justice.
Issues: The main issues were whether the arbitrator's authority was limited to procedural matters, whether the invocation of authority was premature, and whether there was a breach of natural justice.
Ratio Decidendi: The Court ruled that the arbitrator's authority under s 21(3)(b) extends beyond procedural matters and that the arbitrator acted within her rights without breaching natural justice.
Result: Appeals dismissed with costs.
JUDGMENT
A. Introduction
[1] The two Appeals before us are appeals by the Appellant against the High Court 's decision dismissing the Appellant's Originating Summon to set aside an Arbitration Award ("Appeal 1147") on the supposed ground of procedural impropriety in primary reliance of s 21(3)(b) of the Arbitration Act 2005 (" AA ") while at the same time allowing the Respondent's Application to recognise and enforce the same Arbitration Award ("Appeal 1146").
[2] Of course, like many disputations against an Arbitration Award, this supposed procedural impropriety was couched less as a dispute on merits but more so as a breach of natural justice of which the Appellant seeks to persuade the Court to set aside the Arbitration Award under ss 37(1)(b)(ii) and 37(2)(b) of the AA .
[3] Nevertheless, it was plain to us to see that the underlying dissatisfaction of the Appellant was in truth against the merits and substance of the Arbitration Award. The Appellant was in fact dissatisfied with the Arbitrator's finding that time was at large (and only later at the Appeal stage, the Appellant had contended against the Arbitrator's determination on merit and on the issue of quantum).
[4] In any case, the Appellant's primary complaint of 'procedural impropriety' was mounted against the Arbitrator's alleged improper or premature invocation of its authority under s 21(3)(b) of the Arbitration Act 2005 to decide and conclude the Award by drawing on the Arbitrator's own expertise (and EXTRANEOUS EVIDENCE not furnished by any party) despite of expert evidence already tendered before the tribunal by the parties.
[5] On the contrary, the Respondent simply contended that the invocation of the same authority was initiated by the Appellant itself and that the learned arbitrator had drawn on her own expertise to collate and analyse AVAILABLE EVIDENCE which were already tendered by the parties before the tribunal.
[6] The primary disputation led by the Appellant was that the learned High Court Judge ("Learned Judge") had failed to find that the learned arbitrator had over-extended her authority under s 21(3)(b) of the AA beyond it's 'procedural' confines and without first fulfilling the pre-requisites to invoke such an authority vested vide the provision.
[7] The Appellant also contended that the learned arbitrator had unjustly and partially invoked the authority without due notice, and without affording an opportunity to respond to the parties.
[8] In any case, we are minded (and the Appellant's learned counsel during the Hearing of the Appeal had repeatedly intimated) that the core complaint and issue at hand was resoundingly only a matter of procedure. Although unfortunately, though not indulging too deeply into full-fledged substance or merits, we are still aware that the Appellant is seeking (albeit indirectly) for a remedy to impugn the merit and substance of the Arbitration Award.
[9] In any case, we are also aware (nor are we inclined to) delve into the merits or substance of the Arbitration Award which would be a clear transgression of the limited and exhaustive scope of s 37 of the AA (to set aside an Arbitration Award).
B. Brief Facts
[10] Before we delve further into our deliberations, it is only apt that we breifly appreciate the underlying facts.
[11] Kasugi Prima Sdn Bhd ("the Appellant") was the Main Contractor (appointed by Bank Rakyat) to undertake the construction of the Bank Kerjasama Rakyat Malaysia Berhad building in Jalan Travers, Kuala Lumpur ("the Project"). The Respondent (Cobrain Holdings Sdn Bhd) was the sub-contractor appointed by the Appellant to undertake the M&E portion of the Project via a Letter of Award dated 11 January 2010 ("LOA") read together with Articles of Agreement from PAM Contract 2006 (Without Quantities) for the contract sum of RM82,200,000.00 (collectively "the Contract").
[12] The completion date was moved from the initial date of 31 December 2012 to 30 September 2013 with the Certificate
