KN Segara JCA:

[1] The learned Arbitrator in his final award held that the respondent herein (Tenaga Insurance (Malaysia) Sdn Bhd) was not liable to the claimant/appellant herein (Crystal Realty Sdn Bhd) under any of the terms and conditions of the Commercial Motor Policy taken out by the claimant in respect of the Tadano Crane that was damaged on 28 January 1996. The claimant, dissatisfied with the said final award, applied to the High Court to remit and or set aside the said award on the ground that "the said award is bad on the face of it and/or that the principle therein stated as principle of law according to which the said arbitrator proffered to make his award is erroneously stated or applied."

[2] It is settled law that an arbitrator's award may be set aside for an error of law on the face of it. In order to be a ground for setting aside the award, an error of law on the face of the award must be such that it can be found in the award, or in a document actually incorporated with it, or that there is some legal proposition, which is the basis of the award, is erroneous. The principles that have to be applied are very succinctly set out in Halsbury's Laws of England , 4th edn, vol. 2, p. 334 para. 623 "Error of law on the face of award" which was adopted and applied by his Lordship Syed Agil Barakbah in Ganda Edible Oils Sdn Bhd v. Transgrain BV; [1987] CLJ (Rep) 95, [1987] 2 CLJ 394 ; [1988] 1 MLJ 428 at 430:

An arbitrator's award may be set aside for error of law appearing on the face to it, though the jurisdiction is not lightly to be exercised. Since questions of law can always be dealt with by means of a special case this is one matter that can be taken into account when deciding whether the jurisdiction to set aside on this ground should be exercised. The jurisdiction is one that exists at common law independently of statute. In order to be a ground for setting aside the award, an error in law on the face of the award must be such that that can be found in the award, or in a document actually incorporated with it, some legal proposition which is the basis of the award and which is erroneous.

If a specific question of law is submitted to the arbitrator for his decision and he decides it, the fact that the decision is erroneous does not make the award bad on its face so as to permit its being set aside; and where the question referred for arbitration is a question of construction, which is generally speaking, a question of law, the arbitrator's decision cannot be set aside only because the Court would itself have come to a different conclusion; but if it appears on the face of the award that the arbitrator has proceeded illegally, as, for instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award.

[3] The learned High Court judge dismissed the claimant's application to set aside the arbitrator's award and hence this appeal before us by the claimant/appellant herein. The final award of the learned arbitrator appears from pp. 152 to 166 of the appeal record.

[4] It is very clear from the final award that the facts are not in dispute. The parties have agreed as to the circumstances of how the incident took place, which is as follows (para. 1.2.1 of the award):

(a) On 28 January 1996 the insured Nissan Tadano HT Crane bearing registration No. QKC 8951(hereinafter referred to as "the Insured Crane") and a Sumitomo Crawler Crane bearing registration No. QKG 2924 (hereinafter referred to as "Sumitomo Crawler Crane") were employed by the claimant to jointly lift a Silo/water tank weighing approximately 30 tons for positioning onto another similar tank for some engineering works.

(b) During the lowering exercise, unknown and totally unexpected by the Insured Crane driver, Bong Chit Fatt (hereinafter referred to as "Bong"), the driver of the Sumitomo Crawler Crane lowered the Silo/water t