The appeal involved challenges to an arbitration award, focusing on contract performance specifications and validity of contract termination.

Introduction

[1] The appellant had, pursuant to ss 42 and 37 of the Arbitration Act 2005 (" AA "), posed 10 questions for determination by the High Court arising from a Final Award ("Award") published on 15 July 2013 by the Honourable Arbitrator, Mr Chong Thaw Sing ("the Arbitrator"). The appellant was the claimant in the arbitration proceedings.

[2] The learned Judicial Commissioner ("the learned judge"), who dealt with those questions, declined however, in net effect, to interfere with the Award, save for a variation downwards of the quantum of damages awarded to the respondent on their counterclaim from RM9,238,770.00 to RM4,619,385.00.

[3] The notice of appeal filed in this appeal was against the whole of the decision of the learned judge. However, in the memorandum of appeal and submission filed, the appellant did not pursue their appeal against the learned judges decision to dismiss the appellants application under s 37 AA , that is, to have the Award set aside on the ground that there had occurred a breach of natural justice during the arbitral proceedings or in connection with the making of the Award.

[4] The respondent had filed a cross-appeal in turn, against that part of the learned judges decision varying the damages awarded on their counterclaim to the lower sum of RM4,619,385.00.

Background

[5] In 1997, the appellant had brought a proposal to build a laboratory plant to test a new thermal oxidation technology to treat Municipal Solid Waste ("MSW") in Malaysia. A two ton laboratory plant was built in September 1997 at the complex of the Malaysian Institute of Nuclear Technology Research ("MINT") and in 1998, the appellant also obtained some funding from the Ministry of Science, Technology and Environment to continue with further research and development of the thermal oxidation concept.

[6] On 7 January 2001, the appellant and the respondent entered into a contract for the design, construction, completion, testing and commissioning and guarantee for a solid waste treatment plant ("the contract") for a consideration of a lump sum of RM21,910,600.00. This treatment plant was to be located in Labuan and was to employ a new technology called the thermal oxidation process ("TOP") that was proprietary to the appellant.

[7] In essence, TOP involved a two-step combustion of waste. Municipal waste was to be combusted in a primary chamber, which converted it into gas, which was then burnt off at very high temperature in a secondary chamber. The high temperature attained in the secondary chamber of the plant ensured that hazardous gases were removed from its emissions, dispensing with the need for expensive pollution control systems. The primary fuel of the plant was natural gas.

[8] The contract contained certain performance specifications for the treatment plant, relating to the daily capacity of the plant to treat a specified tonnage of unsorted municipal waste, the duration of each burn and the rate of consumption of natural gas. The waste characteristics were specified in the contract, and had been determined by MINT, based on a survey conducted between November 1999 and July 2000.

[9] MINT was appointed by the respondent as its consultant to, inter alia, observe the testing and commissioning of the plant. The contract itself was administered by KLIA Berhad, which had been appointed by the respondent as its project