Raus J:

(1) :

(2) 1 This is an application for an order that the arbitration award dated 24 March 2000 by the learned arbitrator to be set aside, or alternatively, be remitted for reconsideration by reason of the learned arbitrator erroneously stating and applying the principles of law in his award. This application was made under ss 23 and 24 of the Arbitration Act 1952 (‘the Act’) and under O 69 of the Rules of the High Court 1980 (‘the RHC’).

Factual background

(3) 2 The arbitration proceedings is pertaining to a clinic known as ‘Federal Clinic’ which is owned and operated by the third respondent. The applicant, the first and second respondents are directors and shareholders of the third respondent. The three of them entered into two agreements dated 28 February 1979 and 25 February 1980, which provided that any disputes and questions arising from the said agreements shall be referred to a single arbitrator. Disputes arose between the parties and arbitration proceeding were commenced before the late Dato’ Ronald TS Khoo (‘the first arbitrator’) in March 1998. On 24 November 1989, the first arbitrator handed down an interim award, in which it was declared, inter alia, that the applicant was entitled to dividends from the third respondent.

(4) 3 From 1990 to 1998, the first arbitrator continued to hear the parties on the issue of relief to be ordered pursuant to the finding in the interim award. While the arbitration proceedings were so pending the first and second respondent on 10 November 1992, passed a board of directors’ resolution to award themselves salaries in different amounts which affected to the amount of monies in the accounts of the third respondent. A similar resolution was passed in 1997.

(5) 4 The applicant raised the issue of ‘retrospective salaries payments’ before the first arbitrator who agreed to try the issue as part of the reliefs to be awarded in his final award. The issue was significant to the question of reliefs as it affected, inter alia, the total amount of monies available as reserve in the third respondent, which could be distributed by way of dividend. Sadly, the first arbitrator passed away in March 1998 and Tan Sri Harun Muhamad Hashim (‘the second arbitrator’), was subsequently appointed to act in placement of the first arbitrator by the parties to conclude the arbitration including the determination of reliefs.

(6) 5 The second arbitrator heard the submissions on the said issue of the first and second respondent awarding themselves retrospective salaries and handed down his award on 24 March 2000, holding that the retrospective award of salaries was within the authority of the board of directors of the third respondent and was therefore, valid. In view of this finding, the second arbitrator declined to grant the order sought by the applicant, namely that the first and second respondent repay the monies they had withdrawn as retrospective salaries back to the third respondent. In doing so, the second arbitrator rejected the contention which had been raised by the applicant that the ‘remuneration’ sought to be drawn by the directors required the approval of the shareholders at a general meeting of the company and in which the required approval had not been obtained in the present instance. Hence, the applicant made this application.

(7) 6 During the hearing of the application before KC Vohrah J (as he then was) it appears that, counsel Mr Romesh Abraham for the applicant abandoned his reliance on s 23 of the Act (on misconduct of arbitrator on award being improperly procured) and on the Act. He informed the court that he was applying to set aside the award solely on the ground that there was an error on the face of the award. Counsel Mr RD Rajasingam, for the respondents, then raised a preliminary issue, that is, whether the applicant may rely on an error on the face of the record to set aside an award of the second arbitrator. It was argued that the Act does not pr