An arbitral tribunal may enforce an award if jurisdiction is accepted by participation in proceedings, and objections to jurisdiction must be raised timely to be valid under arbitration law.

[1] At the commencement of the hearing of the appeal, the court was informed by the parties that they agree that the decision in Civil Appeal W-02(NCC)-177-01-2012 will apply to and binds the parties in Civil Appeal W-02(NCC)-176-01-2012.

Brief Background

[2] The parties had entered into a sale contract dated 3 April 2009 for the sale of Palm Olein and Palm Kernel Oil. The price of Palm Olein at USD849.75 per tonne and Palm Kernel Oil at USD820.50 per tonne included freight charges. The sale contract contained an Arbitration Agreement. The dispute submitted to the arbitration by the appellant and the respondent was whether, at a meeting on 10 April 2009 in Istanbul, the respondent Pacific Inter-Link Sdn Bhd as seller, had agreed orally to give the appellant a discount of USD30 per tonne in respect of adjustment of the freight component.

[3] The arbitration was conducted on documents only. The arbitral tribunal concluded that the respondent had orally agreed to give the discount of USD30 per tonne. On this basis, it awarded the sum of USD180,768.42 to the appellant.

[4] By an originating summons on 15 August 2011, the appellant Food Ingredients LLC had applied, pursuant to s 38 of the Arbitration Act 2005 ("the Act"), to the High court to recognise and enforce an award it had obtained against the respondent (the award).

[5] The application was dismissed on 16 December 2011 with costs by the High court on objections raised by the respondent under s 39(1)(a)(ii), (iv) and (v) of the Act. The High court held that the arbitral tribunal had no jurisdiction to make the award as the Arbitration Agreement did not extend to the disputes raised in the arbitration.

[6] The appellant appealed to this court.

[7] After hearing the parties, we allowed the appeals with costs, set aside the orders of the High court and entered judgment in terms of the originating summons of 15 August 2011. We maintained costs RM10,000 in the court below and awarded costs in the sum of RM7,500 in this court for each appeal.

[8] The following are our reasons.

The Arbitration Act 2005 (Act 646)

[9] The appellants application was made under s 38 of Act for the award to be recognised as binding and be enforced by entry as a judgment in terms of the award or by action.

[10] The respondent requested a refusal under s 39 of the Act which provides:

"(1) Recognition or enforcement of an award, irrespective of the state in which it was made, may be refused only at the request of the party against whom it is invoked:

(a) where that party provides to the High court proof that:

(i) a party to the arbitration agreement was under any incapacity;

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of the state where the award was made;

[(1)(a)(ii) Am Act A1395: s 8 Prior text read "the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia;"]

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present that partys case;

(iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;

(v) subject to subsection (3), the award contains decisions on matters beyond the scope of the submission to arbitration;

[(1)(a)(v) Am Act A1395: s 8 Prior text read - "subject to subsection (2), the awar