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2025 MarsdenLR 5129
COURT OF APPEAL PUTRAJAYA
KASUGI PRIMA SDN BHD – Appellant
Versus
COBRAIN HOLDINGS SDN BHD & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-02(C)(A)-1146-07-2023 & W-02(C)(A)-1147-07-2023]
An arbitrator's authority under the Arbitration Act 2005 includes drawing on expertise beyond procedural matters, provided evidence is previously tendered, ensuring fairness in the arbitration process.
Headnote:(A) Arbitration Act 2005 - Sections 21(3)(b), 37(1)(b)(ii), and 37(2)(b) - Appeals against dismissal of summons to set aside arbitration award and application for enforcement - Claims of procedural impropriety and breach of natural justice contended by the Appellant, focusing on the arbitrator's interpretations and use of expertise - Court determined that the arbitrator did not exceed her authority and appropriately utilized her expertise based on available evidence. (Paras 1, 2, 6, 22, 36, 50, 63)
(B) Procedural Impropriety - Courts must respect the limited scope of review over arbitration awards and refrain from delving into merits unless clear procedural violations are established - Arbitrators may draw on their own expertise in the context of previously tendered evidence without breaching the rules of natural justice. (Paras 36, 62)
Facts of the case:
The Appellant engaged the Respondent as a sub-contractor for a building project. The dispute arose over delays and payments following an arbitration decision favoring the Respondent. The Appellant sought to set aside this arbitration decision, citing procedural impropriety. (Paras 11-18)
Findings of Court:
The court found the arbitrator's decision to draw on her expertise was within her authority and claimed that the Appellant's arguments were not sufficiently substantiated. Both Appeals were dismissed, maintaining the arbitrator's award and enforcing its enforcement. (Paras 63)
Issues: The central issues were whether the arbitrator's invocation of authority was confined to procedural matters, if the invocation was premature, and if it breached rules of natural justice. (Paras 21, 22)
Ratio Decidendi: The court ruled that the arbitrator's authority was not limited to procedural issues; the arbitrator's role includes determining matters of substance based on the evidence before her. Furthermore, drawing on one's expertise is permissible when evaluating tendered evidence. (Paras 21, 62)
Result: Both Appeals are dismissed with costs awarded to the Respondent. (Paras 63, 64)
| Table of Content |
|---|
| 1. procedural impropriety in arbitration complaints. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. factual basis of the arbitration dispute. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 3. interpreting arbitrators' authority under s 21(3)(b) of the aa. (Para 21 , 22 , 23 , 24) |
| 4. existence of procedural disputes during arbitration. (Para 36 , 37 , 38 , 39) |
| 5. differentiating external evidence from available evidence in arbitration. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50) |
| 6. dismissing the appeals with costs. (Para 63) |
A. Introduction
[1] The two Appeals before us are appeals by the Appellant against the High Court's decision dismissing the Appellant's Originating Summons to set aside an Arbitration Award ("Appeal 1147") on the supposed ground of procedural impropriety in primary reliance on s 21(3)(b) of the Arbitration Act 2005 (" AA ") while at the same time allowing the Respondent's Application to recognise and enforce the same Arbitration Award ("Appeal 1146").
[2] Of course, like many disputations against an Arbitration Award, this supposed procedural impropriety was couched less as a dispute on merits but more so as a breach of natural justice of which the Appellant seeks to persuade the Court to set aside the Arbitration Award under ss 37(1)(b)(ii) and 37(2)(b) of the AA .
[3] Nevertheless, it was plain to us to see that the underlying dissatisfaction of the Appellant was, in truth, against the merits and substance of the Arbitration Award. The Appellant was in fact dissatisfied with the Arbitrator's finding that time was at large (and only later, at the Appeal stage, the Appellant had contended against the Arbitrator's determination on merit and on the issue of quantum).
[4] In any case, the Appellant's primary complaint of 'procedural impropriety' was mounted against the Arbitrator's alleged improper or premature invocation of its authority under s 21(3)(b) of the Arbitration Act 2005 to decide and conclude the Award by drawing on the Arbitrator's own expertise (and extraneous evidence not furnished by any party) despite expert evidence already tendered before the tribunal by the parties.
[5] On the contrary, the Respondent simply contended that the invocation of the same authority was initiated by the Appellant itself and that the learned arbitrator had drawn on her own expertise to collate and analyse available evidence which were already tendered by the parties before the tribunal.
[6] The primary disputation led by the Appellant was that the learned High Court Judge ("Learned Judge") had failed to find that the learned arbitrator had over-extended her authority under s 21(3)(b) of the AA beyond its 'procedural' confines and without first fulfilling the pre-requisites to invoke such an authority vested vide the provision.
[7] The Appellant also contended that the learned arbitrator had unjustly and partially invoked the authority without due notice and without affording an opportunity to respond to the parties.
[8] In any case, we are minded (and the Appellant's learned counsel during the Hearing of the Appeal had repeatedly intimated) that the core complaint and issue at hand was resoundingly only a matter of procedure. Unfortunately, though not indulging too deeply into full-fledged substance or merits, we are still aware that the Appellant is seeking (albeit indirectly) a remedy to impugn the merit and substance of the Arbitration Award.
[9] In any case, we are also aware, nor are we inclined to, delve into the merits or substance of the Arbitration Award, which would be a clear transgression of the limited and exhaustive scope of s 37 of the AA (to set aside an Arbitration Award).
B. Brief Facts
[10] Before we delve further into our deliberations, it is only apt that we briefly appreciate the underlying facts.
[11] Kasugi Prima Sdn Bhd ("the Appellant") was the Main Contractor (appointed by Bank Rakyat) to undertake the construction of the Bank Kerjasama Rakyat Malaysia Berhad
