Haidar Mohd Noor JCA:

This appeal is against the judgment of the learned judge in the court below, who allowed the application of the respondent by way of notice of originating motion by setting aside the arbitration award published on 12 April 1996 of the Appeal Board of the Palm Oil Refiners Association of Malaysia (PORAM) and the award of the arbitrators dated 22 November 1995 (duly accepted and affirmed by the said Appeal Board). As is usual, the learned judge ordered costs of the application against the appellant.

The motion was filed pursuant to s. 24(1) of the Arbitration Act 1952(Act 93). It reads:

24. (1) ...

(2) where an arbitrator or umpire has misconducted himself or the proceedings, or an arbitration or award has been improperly procured, the High Court may set the award aside.

The ground on which the award was set aside by the learned judge was because he found that there was an error of law apparent on the face of the award relying on the case of AG of Singapore v. Wong Wai Cheng[1978] ; [1980] 1 MLJ 131, where at p. 135 Wee Chong Jin CJ said:

In our judgment the failure of the arbitrator to construe the contract, in particular clause 32(b) of the conditions of contract, and to consider all the facts and circumstances of the case, in particular the fact that the original completion date had been extended and it was within the contemplation of the parties that the time for completion was not of the essence of the contract amount to an error of law apparent on the face of the award.

In the circumstances we need to examine the facts before the arbitrators and the relevant terms of the contract entered into between the parties in order to determine whether the learned judge erred in setting aside the award.

In October 1993, the respondent agreed to sell to the appellant, a company incorporated in Pakistan, and the appellant agreed to buy 6000 metric tons of RDB (refined, bleached, deodorised) palm oil.

The parties on 21 October 1993 executed the following three contracts based on the PORAM standard FOB contract format:

(a) contract no. 93 11 S 79 for delivery in November 1993 of 2000 metric tons of RDB palm oil;

(b) contract no. 93 12 S 80 for delivery in December 1993, of 2000 metric tons of RDB palm oil;

(c) contract no. 94 01 S 81 for delivery in January 1994, of 2000 metric tons of RDB palm oils.

The appellant opened on 23 October 1993 and 14 November 1993, Irrevocable Letter of Credit respectively for the first two contracts, that is, contract no. 93 11 S 79 and contract no. 93 12 S 80 thus requiring the respondent to arrange for shipment of the first two quantities of 2000 metric tons of RDB palm oil each. The appellant did not open an Irrevocable Letter of Credit for the third contract, that is, no. 94 01 S 81 and hence the respondent was not required to program shipping for the third batch of 2000 metric tons of RDB palm oil.

Pursuant to the first contract, the respondent duly made partial shipments (agreed to by the appellant) of:

(a) 1000 metric tons of RDB palm oil on 25 October 1993; and

(b) 544.7838 metric tons of RDB palm oil on 6 November 1993.

Thus, the amounts due and payable to the respondent would be:

(a) USD356,000 in respect of the first shipment of 1000 metric tons of RDB palm oil on 26 January 1994; and

(b) USD 193,943.03 in respect of the second shipment of 544.738 metric tons of RDB palm oil on 3 February 1994.

The respondent was unable to ship the balance and on 15 January 1994, the appellant agreed to extend the shipment date to:

(a) 28 February 1994 for the balance due under the first contract; and

(b) 20 March 1994 for the second contract.

However, on 25 January 1994 ie, more than a month before the expiry of the extended shipment (as agreed by the appellant), the appellant, without notice to the respondent, took out an injunction in Azed Kashmir to stop payment by the bank in Singapore of all monies due to the respondent. Unfortunately, it was too late to stop payment of USD 35