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2025 MarsdenLR 4464
COURT OF APPEAL PUTRAJAYA
PT WIJAYA KARYA (PERSERO) TBK & ANOR – Appellant
Versus
ZECON BERHAD & ANOR – Respondent
[Civil Appeal No: Q-02(C)(A)-1971-10/2021]
The court affirmed that both Project Management Services Agreements are valid arbitration agreements under the Arbitration Act 2005, and the Arbitrator's findings were consistent with the evidence, dismissing claims of natural justice violations.
Headnote:(A) Arbitration Act 2005 - Section 9(1) - International Arbitration - Appellants' claims against Respondents for non-payment under Project Management Services Agreements - High Court's decision to set aside the Final Arbitration Award found erroneous - Court affirmed the Award, ruling that both PMSA-1 and PMSA-2 subsist and are valid agreements - The Respondents' jurisdictional challenge was properly dismissed by the Arbitrator. (Paras 20, 33, 44)
(B) Natural Justice - Allegations of breach of natural justice in arbitral proceedings - Court upheld that Respondents were given adequate opportunity to present their case and that the Arbitrator's findings were not extraneous. (Paras 38, 41)
Facts of the case:
The dispute arose from non-payment under two Project Management Services Agreements between the Appellants and the Respondents for a construction project in Malaysia. The Appellants sought RM6,731,753.61 for outstanding claims, while the Respondents counterclaimed RM6,122,041.37. The Final Award favored the Appellants, which the High Court later set aside.
Findings of Court:
The High Court erred in finding no valid arbitration agreement and misinterpreted the nature of the Award. The Arbitrator's findings were supported by the evidence and applicable law.
Issues: The main issues included the validity of the arbitration agreements and whether there was a breach of natural justice during the arbitration.
Ratio Decidendi: The court ruled that the arbitration agreements were valid and that the findings of the Arbitrator were not only correct but consistent with the evidence presented. The High Court's decision to set aside the Award was unsupported.
Result: Appeal allowed; the Final Arbitration Award is upheld.
[1] This appeal arises from the High Court's decision on 1 October 2021 setting aside the Final Arbitration Award dated 25 January 2021 ("the Award") which was in favour of the Appellants. The Appellants were the "Claimants" and the Respondents as "Respondents" in the International Arbitration No AIAC/INT/ADM-610-2018C of which the seat was in Kuching Sarawak, Malaysia. The Award was delivered by a sole Arbitrator, Ms Tan Swee Im.
Brief Facts
[2] The 1st Respondent, Zecon Berhad is a public company incorporated under the laws of Malaysia.
[3] The 2nd Respondent, Zecon Construction (Sarawak) Sdn Bhd is incorporated under the laws of Malaysia and is a subsidiary of the 1st Respondent.
[4] The 1st Appellant, PT Wijaya Karya (Persero) TBK is a company incorporated under the laws of Republic of Indonesia.
[5] The 2nd Appellant, Wijaya Karya Perseron Sdn Bhd is a private limited company incorporated under the laws of Malaysia.
[6] The 1st Respondent wholly owned subsidiaries, Zecon Land Sdn Bhd and Zecon Petrajaya Sdn Bhd were awarded a design and build contract for the development of Mydin-Retail Mall in Kuching ("the project").
[7] For the implementation of the project, the 1st Respondent engaged the 1st Appellant for the scope of project management services and manpower supply for the superstructure works.
[8] On 13 August 2014, the 1st Respondent and the 1st Appellant had entered into a Project Management Services Agreement Contract No. MY-1/14/W ("PMSA-1") for the provision of the services for the contract sum of RM13,830,591.00
[9] On 12 Novermber 2014, the nominee and agent of both 1st Respondent and 1st Appellant, namely the 2nd Respondent and 2nd Appellant entered into a Project Management Service Agreement Contract No. MY-1/14/W-AMD ("PMSA-2") for the contract sum of RM11,485,397.00.
[10] Each of the two Agreements contained a dispute resolution clause stated in cl 13 respectively as follows:
"Clause 13-Dispute Resolution
All disputes between the Parties in relation to this agreement shall be principally settled amicably by the PARTIES. In case of the THE PARTIES could not settle their dispute amicably, such dispute shall be taken into Arbitration for the final and binding settlement. Such arbitration shall take place in Kuala Lumpur, pursuant to KLRCA (Kuala Lumpur Regional Centre for Arbitration) rules and shall be conducted in English."
[11] On 20 June 2018, the Appellants issued Notice of Arbitration against the Respondents through their solicitors, Messrs. Arthur Lee, Lin and Co Advocates.
[12] Ms Tan Swee Im was appointed as the Sole Arbitrator for the aforesaid International Arbitration by the Director of the AIAC and the acceptance of Ms Tan Swee Im was confirmed on 18 April 2019 and at all material times her appointment received no challenge by the parties herein.
[13] During the course of Arbitration and pursuant to Procedural Order No 1 dated 24 May 2019 and the subsequent updated Procedural Order No 1A dated 3 September 2019, the parties to the arbitration amongst others agreed that the seat of arbitration was to be amended from Kuala Lumpur to Kuching, Sarawak and the Arbitration is governed by the Arbitration Act 2005 and the AIAC Arbitration Rules 2018.
[14] In essence, the disputes between the Appellants and the Respondents arose on:
(a) The non-payment by the Respondents that eventually led to the termination/suspension of PMSA-1 and PMSA-2 of the Appellants; and
(b) The alleged non-performance issued under the Appellants extension of time application dated 19 January 2005.
[15] Summarily, the claims by the Appellants during the Arbitration are as follows:
a. The outstanding sum of RM6,731,753.61 (exclusive of GST);
b. Interest against the Respondents at the rate of 12.5% p.a. for delay/non-payment for the period of August 2014 - July 2016, in the sum of RM1,176,196.26 as of 11 August 2016;
c. Interest at the rate of 5% per annum on the said outstanding sum of RM6,731,743.61 from the due date as
