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2016 MarsdenLR 1097

COURT OF APPEAL PUTRAJAYA
ALAMI VEGETABLE OIL PRODUCTS SDN BHD – Appellant
Versus
HAFEEZ IQBAL OIL & GHEE INDUSTRIES – Respondent
[Civil Appeal No: B-02-1571-07-2013]



Petitioner Advocates:Mohd Iskandar Ismail ,Respondent Advocate: Ajit Kumar

Distinction between sections 38 and 39 of the Arbitration Act 2005 requires objections to awards to be formally stated under s 39, not s 38.

Headnote:This judgment involves an appeal against the enforcement of arbitration awards under the Arbitration Act 2005, specifically sections 38 and 39. The court found issues of merit cannot be addressed under section 38, which strictly pertains to recognition procedures (Paragraph 2). The court noted that objections to an award must be formalized via section 39 applications, emphasizing the distinction in procedural handling (Paragraphs 3-14). The outcome confirmed the initial ruling, dismissing the appeal (Paragraph 15).

Table of Content
1. nature of the appeal regarding arbitration awards. (Para 1)
2. discussion on objections to arbitration awards through s 39. (Para 2 , 5 , 9 , 10)
3. clarification of procedures distinguishing arbitration types. (Para 3 , 4 , 6 , 8 , 12 , 13)
4. ruling on the necessity for s 39 applications. (Para 7 , 14)
Hamid Sultan Abu Backer JCA:

[1] The appellant/defendant appealed against the judgment of the learned High Court Judge in respect of an application by the respondent/plaintiff/ claimant for two arbitration awards issued in Malaysia, to be recognised and enforced as judgments, pursuant to s 38 of the Arbitration Act 2005 ( AA 2005). The award in question was related to s 3(3) of 2005 which states as follows:

"3. Application to arbitrations and awards in Malaysia

...

3) In respect of an international arbitration, where the seat of arbitration is in Malaysia:

(a) Parts I, II and IV of this Act shall apply; and

(b) Part III of this Act shall not apply unless the parties agree otherwise in writing."

[2] What is important to note in the instant case is that it is not permissible to argue issues relating to the award or merit of the award, etc under s 38 of AA 2005 as the merit of the award cannot be an issue under s 38, whereas it is permissible to place such an argument in an application under s 39 of 2005. The respondent's application was premised under s 38 (which has to be read with s 39) as evidence in the intitulement to the application found at pp 14 to 17 Volume 1 Part A of the appeal record. For s 39 to apply, the application must be made by the respondent to the award. In this case, the respondent to the award was the appellant/defendant and no such application had been filed but only an opposing affidavit stating why the respondent's/plaintiff's application should not be allowed. The reasons for the objection were stated as follows:

"6. Saya telah dinasihati oleh peguamcara defendan dan sesungguhnya percaya bahawa "Appeal Board Award" adalah awad timbangtara yang berlandaskan "international arbitration", mengikut s 2 " Arbitration Act 2005 ". Jika diperhatikan dalam seksyen tersebut dan bahawa tidak ada sebarang peruntukan dalam Akta tersebut yang membenarkan awad yang melandaskan "international arbitration" boleh didaftarkan sebagai satu Penghakiman dalam bidangkuasa Mahkamah Yang Mulia ini. Seksyen 38 " " yang dengan muktamad dan secara menyeluruh meliputi "arbitration award" yang boleh didaftarkan sebagai penghakiman tidak merujuk kepada "Award" yang melandaskan "international arbitration".

7. Saya juga telah dinasihati oleh peguamcara defendan dan sesungguhnya percaya bahawa dengan nyatanya plaintif tidak berhak mendaftarkan "Appeal Board Award" kerana, mengikut s 38 " Arbitration Act 2005 " Mahkamah Yang Mulia ini hanya mempunyai bidangkuasa untuk memasukkan Penghakiman untuk awad berdasarkan "Domestic Arbitration" atau "from a Foreign State".

8. Saya menyatakan bahawa dalam premis ini dan alasan di atas sahaja berdasarkan isu undang-undang tersebut, permohonan plaintif harus ditolak dengan kos oleh Mahkamah Yang Mulia ini.

9. Selanjutnya dan/atau secara alternatif defendan menyatakan di sini bahawa "Appeal Board Award" adalah tidak sah di sisi undang-undang kerana Timbangtara "Appeal Board" yang bersidang telah melampaui bidangkuasanya dan/atau di luar bidangkuasa dalam membuat "Appeal Board Award" tersebut semasa persidangan rayuan yang diadakan pada 27 Mei 2010."

[3] The appellant had not appreciated the distinction between ss 38 and 39 of AA 2005. Section 38 procedure is a 'recognition procedure' to convert an arbitration award to a judgment. This can only be done by a person holding an arbitration award. If the respondent to the award wants to object to the procedure, he can file an affidavit to do so. (See International Bulk Carriers Spa v. CTI Group Inc , 2014 MarsdenLR 123 ). If the respondent to the award wants to object to its enforcement, then an application under s 39 setting out o

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